A Sour Bean Sweetens Cocoa Supply

A Sour Bean Sweetens Cocoa Supply
LESLIE JOSEPHS
Updated March 19, 2014 9:05 p.m. ET

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With a name reminiscent of a “Star Wars” droid and a reputation for having an acidic taste, the CCN 51 cocoa bean is an unlikely savior of the $110 billion chocolate market.

But some confectioners and farmers look to beans from the high-yielding CCN 51 tree to counter a looming shortage in the production of cocoa even as others swear never to use it.
Global cocoa supplies are forecast to fall short of demand for a second consecutive season. Candy makers are fretting as consumption rises in developing nations like Brazil, China and India, while cocoa-tree yields stagnate and some farmers switch to other crops. M&M’s purveyor, closely held Mars Inc., estimates the world will need an additional one million metric tons of cocoa by 2020, 25% higher than current annual output.
One potential solution: a variety of cocoa tree known as CCN 51. Developed in Ecuador by an agronomist almost 50 years ago, the variety can yield about four times as much cocoa as the world average.
World cocoa production fell short of demand by 174,000 metric tons in the season ended in September. This year, demand is expected to outpace supplies by 115,000 tons, according to the International Cocoa Organization, as emerging-market consumers take a bigger bite out of global cocoa supplies. The London-based trade group expects that trend to continue for five years, which increases the need for a high-yielding variety. On Wednesday, cocoa for delivery in May on ICE Futures U.S. gained 0.4%, or $11, to settle at $3,025 a ton, near a 2½-year high.
Adopting the new variety across the tropics may sound like an easy decision given its higher productivity. But CCN 51 has sparked a debate among chocolatiers. Big candy companies are incorporating the new beans into their supply, but some specialty sellers say chocolate made from the beans doesn’t taste good. Meanwhile, some confectioners worry the more productive CCN 51 trees will displace the rich and flavorful varieties of cocoa in the Amazon River Basin, cocoa’s birthplace.
CCN51
Long considered the “Ugly Duckling” of the cocoa world for its acidic taste, the high-yielding CCN51 variety from Ecuador is coming into its own as the world falls short of the key chocolate ingredient. Growers and chocolatiers have learned to improve its taste through better processing, but it’s no magic bullet.
Pros
Can yield four times the world average
It has high content of cocoa butter, which gives chocolate its “mouthfeel.”
It has shown resistance to certain cocoa diseases.
Higher yields can improve farmer income
Cons
Flavors are less intense than other varieties.
Best yields come from plantation-style farms, but most of the world’s cocoa is grown on small plots.
Very high yields and disease resistance reported in northern South America, but it may not fare as well in other tropical environments due to different soil, insects, rainfall and other factors.
Some cocoa and chocolate experts worry it would spoil diversity among cocoa trees.
Lindt & Sprüngli AG, the Swiss chocolatier that makes Lindor truffles, said it doesn’t use CCN 51. The company recently helped fund a study with the U.S. Department of Agriculture to devise a way to test cocoa bean DNA to better weed out unwanted varieties.
“The flavor of CCN 51…is flat,” said Francisco Javier Gómez, international business director at Colombian chocolatier CasaLuker SA. “It’s for so-called mainstream products.”
For big chocolate makers, an increase in cocoa yields from existing trees is essential for future chocolate production. Unlike other major commodities like cotton or corn, which are annual crops, cocoa trees take around four years to bear a commercially viable harvest.
“CCN is a workhorse,” said Howard Yana Shapiro, chief agricultural officer at Mars. “It’s a dream-come-true cultivar.” The CCN 51 trees are highly productive and the beans in its pods are larger and produce more cocoa butter than most other varieties. Cocoa butter is used to give chocolate a creamy mouth-feel.
Mars and Cadbury maker Mondelez International
Inc. MDLZ -0.73% say the CCN 51 beans can appear in the cocoa butter used to make their confections. Closely held Cargill Inc. and Switzerland’s Barry Callebaut AG BARN.EB -2.04% , some of the world’s biggest cocoa processors, say they do process CCN 51 beans.
Maximina Ventura, a cocoa farmer in Peru, holds up a CCN 51 pod, left, and a smaller, fine-flavored cocoa variety. The CCN 51 pod is the more productive of the two. Leslie Josephs/The Wall Street Journal
CCN 51 was developed by Homero Castro, an agronomist who was conducting independent research on cocoa in coastal Ecuador in the 1960s. Mr. Castro was killed in a car accident in 1988.
Even after Mr. Castro successfully developed the high-yielding variety, its adoption was met with skepticism.
“People wanted proof,” said Sergio Cedeño, a fifth-generation cocoa farmer in Ecuador whose grandfather’s farm was the site of some of Mr. Castro’s research. “They would say: ‘Those trees are going to die in 10 years.'”
Ecuadorean growers started planting CCN 51 in earnest after bad weather hit the crop in the late 1990s. The country’s output has more than doubled in the past decade.
CCN 51’s own hyperproductivity also has been its downfall. Cocoa beans grow inside oblong pods. When the pods are cut open, the beans are covered in moist pulp. What gives chocolate its flavor is the fermenting process, when the beans are put in a box and left for four to six days.
The CCN 51 variety produces more beans but also more pulp. The fermenting process made the resulting chocolate too overwhelming and gave the beans a sour, acidic flavor.
“I’m not going to let it in,” said Emily Stone, founder of Maya Mountain Cacao, a Belize-based cocoa-trading company that supplies small chocolate makers in the U.S.
Change in the cocoa and chocolate industry often occurs at a glacial pace. The prospect of CCN 51 is a touchy subject, especially in the Amazon rainforest, where cocoa originated and where cocoa farmers tout their beans’ unique and delicate flavors. In Africa, growers fear that a switch to a single, albeit high-yielding, variety could leave the source of two-thirds of the world’s cocoa supply susceptible to disease.
The quality of CCN 51 beans is improving. The fermenting process has been shortened over the last 10 harvests.
“The early CCN 51 was very sour in taste and was not seen as a viable choice for making chocolate,” said Kip Walk, a three-decade veteran of the cocoa industry and sustainability director for Chicago-based Blommer Chocolate Co., one of the largest North American cocoa processors, which buys CCN 51 beans from Ecuador. “That flavor has greatly improved, and CCN is a part of chocolate formulas today.”
Even some of the world’s pickiest palates are starting to warm to new beans.
Lene Hjort Lorenzen, corporate social responsibility and innovation manager at Toms Gruppen A/S, a Danish chocolate maker, which supplies the Royal Danish Court with treats like pralines and truffles, said that while the company only buys fine-flavor cocoa, not CCN 51 beans from Ecuador, it would be open to it in the future.
“I have tasted CCN 51 that was fermented well, and the chocolate was actually good,” she said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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