It was almost 5 years ago that the famous Belgian chocolate maker Galler took the decision to go Fairtrade and source only Fairtrade cocoa. This major change is part of a wider and profound transformation of its business model.
Founded in 1976 by Jean Galler, the Liège chocolate factory of the same name has grown and evolved over the years, gradually becoming a major supplier to supermarkets in the Benelux and a full-fledged player in the retail sector with its chain of some fifteen shops. But after almost half a century in business, the company has taken a radical decision to completely reinvent itself. ‘Until 2019, Galler was certainly a family business that already had the will to put people at the centre of the debate, but it remained a traditional company focused on profit,’ explains Salvatore Iannello, the company’s CEO for the last 5 years. In 2020, we became a company with a raison d’être, based on the 4P model: People, Planet, Profit and Purpose. It all started with a realisation’, he continues. If we want to ensure the survival of humanity on Earth, we must change the way we do business. We have a very strong belief, which guides all our decisions, that there can be no justice for the planet without social justice. This is why our raison d’être has become to embody, within the world of chocolate, an entrepreneurial approach based on the alignment of interests, rather than the balance of power, in order to build a fair and sustainable world. For us, the shareholder is a stakeholder who must be respected, just like the consumer, the ecosystem, our employees, our suppliers, etc.’.
Fairtrade, but accessible
‘When we agreed this change of strategy, one of our first concerns was to put fairness back at the heart of our supply chain’, continues Laura Lespagnard, ethical and sustainability coordinator at the company. ‘So the first thing we did was to become Fairtrade. After analysing the situation, we decided that this was the most appropriate label, which would have the greatest impact on producers, both socially and environmentally. But Salvatore Iannello stresses that there is no question of transforming Galler’s sticks and tablets into products accessible only to a handful of consumers. ‘For years, fair trade was the preserve of a minority of wealthy people, or at least it didn’t manage to become widespread. There was no real awareness on the part of the market and this was not the way to change things. Why? Mainly because the extra euro paid to the cocoa farmer thanks to fair trade was transformed into 10 euros at the end of the chain on the consumer side, quite simply because we live in a world where everyone margins on percentage margins. That’s why at Galler we’ve introduced the concept of a euro for a euro: if I give an extra euro to the cocoa farmer, all the players in the chain agree to carry over that euro, and in the end the consumer only pays one euro more.
Having our cake and eating it too
‘Beyond the fair trade aspect, we also felt it was very important to take action on the ground,’ continues Laura Lespagnard. ‘That is why we set up a long-term partnership with an Ivorian cooperative, Yeyasso. On a commercial level, Galler has agreed to buy around 1,000 tonnes of cocoa beans from Yeyasso every year, but indirectly. In practice, this means that the Liège-based chocolate maker has agreed with its supplier, the Swiss giant Barry Callebaut, that the latter will buy the agreed quantity of beans from Yeyasso and then supply Galler with the equivalent mass of cocoa. ‘Today, there are two philosophies in the supply chain: either do traceability or do mass balance’, explains Salvatore Iannello. ‘We wanted to have our cake and eat it too, in the sense that we make sure that the cooperative gets its money’s worth, and we pay more for that, but we don’t apply 100% traceability to the beans, which would cost us even more and the additional cost of which would not end up in the hands of the cocoa farmers anyway, but in the hands of the intermediaries.
But the partnership with Yeyasso is about more than just trade. Since 2020, we have set up a series of projects in Côte d’Ivoire in partnership with the cooperative, which carries out daily monitoring in the field, and various Belgian organisations such as universities, the King Baudouin Foundation, Fairtrade Belgium and Enabel,’ explains Laura Lespagnard, adding that 150,000 euros are invested each year through the Fairtrade premium. These projects focus on agroforestry, organic farming, improving the quality of beans, diversifying the income of cocoa farmers, etc., with the dual aim of increasing the income of producers and having a positive impact on the environment. Salvatore Iannello adds: “The income equation for cocoa farmers needs to be approached differently from ours. On average, cocoa represents only around 45% of their total financial income. So helping them to develop food crops and sell their crops on local markets is a key factor in making a significant impact on their standard of living. For example, we have invested in machines to produce manioc flour, motorised tricycles to facilitate the transport of goods, etc.
Paradigm shift
Another initiative supported by Galler and implemented by its Ivorian partner is the keeping of farm books, a tool developed by Fairtrade Africa. The idea is to monitor cocoa farmers’ incomes from year to year so that we can, among other things, observe and measure the impact of diversification,’ explains Laura Lespagnard. At the end of the 2022-2023 campaign, the data collection shows that of the 1,314 Galler-producer families, 1,110 are above the extreme poverty threshold, i.e. around 95%. As for the proportion of families above the subsistence level, we have now reached 28%, compared to 21% in the previous campaign. This means that we are better able to identify the trends that allow these thresholds to be crossed, such as being a relatively small household, having a large farm area, being close to an urban centre, being less dependent on cocoa alone, and so on. All this information helps us to design better projects.
In recent months, however, the sudden rise in commodity prices has had an even greater impact on cocoa farmers’ incomes. We’ve just seen a real paradigm shift, and that’s a very good thing,’ says Salvatore Iannello with satisfaction. When cocoa farmers realised that prices were exploding, they put pressure on the Ivorian government, which led to a 50% increase in the ‘on-farm’ price. Such an increase now exceeds their average income, although the positive effect is partly mitigated by the decline in productivity, so that while farmers earn more money per kilo, they have less cocoa to sell. In any case, the price of cocoa beans was too low and there was not enough value added for farmers to make a profit. Now the market is gradually moving towards fair value.
Speculators and consumers-actors
But not everything in the sector is perfect, far from it. ‘The key element of a 4P model is the trade-off between the Ps, while recognising that a company that doesn’t make money will die. There has to be a balance,’ insists Galler’s CEO. ‘Raising the price of beans in today’s world is dangerous because there are perverse leverage effects associated with the neoliberal system. Our view of what has happened is as follows: one third of the inflation is structural, one third is due to the effects of climate change, and one the third has been generated by speculation. The latter is a real disgrace, because it’s all about making money out of money at the expense of cocoa farmers and people like us who work. This situation is a dangerous bottleneck in the system. Today, if we do nothing and everything else remains the same, the impact of soaring prices on our 2025 results will be around €3.6 million. This is unsustainable. So we need to adapt to ensure that our P for profit can continue to finance the P for people and the P for planet. If we only had the paradigm shift to deal with, we could absorb the shock without too much difficulty. And a second bottleneck that Galler’s boss deplores is the fact that the cocoa market is still locked up by African governments and a few big players in the sector. ‘We’ve tried to disrupt supply, we’ve tried to get our own export licence, but it’s proved impossible,’ he says. ‘Of course we could disrupt elsewhere in the world, but when you consider that 65 to 70% of the world’s supply is concentrated in Côte d’Ivoire and Ghana, not having an impact on these two countries is tantamount to not moving the world. If we want to move the world’s cocoa agenda, we need to make an impact in Africa. However, I hope that globalisation and the transparency of information will eventually enable cocoa farmers to see the value of their business on the market, and that they will put so much pressure on their governments that things will finally change, with the help of NGOs and chocolate makers like us’.
Despite it all, Salvatore Iannello believes that the final say still lies with one particular link in the chain: the consumer. ‘Consumers need to become active consumers,’ he says. ‘Because while the injustice of our industry can be analysed through its physical flow, i.e. the cocoa bean, the solution can only come through its financial flow. And at the end of this financial flow is the consumer. If we succeed in turning consumers into actors, they can change the world. But this requires them to become aware of the issue and to work on communication, which is our responsibility as chocolate makers. The problem is that too many people are still stuck in the old paradigm. They talk about transition, but when it comes to reasoning, they get into a purely economic rationale, without any other consideration…’.
– Anthony Planus, for Enabel’s Trade for Development Centre.
– Photo: Salvatore Ianello, during a visit to the Ivory Coast
