Robo Adhuze is the Chief Executive Officer of SchokVille Limited, producers of Idan Premium Chocolates, based in Alade-Idanre, Ondo State. Since 1991, he has been involved in various segments of the cocoa value chain and has been involved in the major developments of the Nigeria cocoa industry since 1996. He speaks on value addition in the cocoa industry.
How did the "Bean-to-Bar" concept start?
I think for many people, it was more of passion than a demand market. People said, decafe your caffeine. That's how it started. Globally, the bean-to-bar market is part of the cocoa and chocolate value chain. Many years ago, there was nothing like that. We had the cocoa processors, big chocolate makers and the confectionaries.
Then people who had taste for something better, something original, began making demands as to what they wanted.
The bean-to-bar means that you establish a small factory, collect beans from the farm, sometimes your own farm. Then convert that into chocolate and sell it. That is different from the traditional chocolate companies that buy bulk cocoa and sometimes bulk cocoa powder, which they convert to chocolate.
So, this is a small-scale enterprise?
Generally, we have micro, small and medium. It does not go beyond medium when you talk about bean-to-bar. When you go beyond medium to mega enterprises, you are already going to a multi-million-dollar manufacturing business.
How did this start in Nigeria?
As I said, a lot of people who began it in Nigeria started it as a hobby. Let me give you a typical story of Choc Boy in Ibadan. He is an event person who used to buy chocolate and give it to people whenever he travelled. Then some people would say to him: "I like the chocolate you buy. I have my wedding here. Please, get me some chocolate."
At that point, he said that we have cocoa here so we can make chocolate. For him, that's how it started. For others, it was a matter of seeing the opportunity. A lot of chocolate is imported into Nigeria, which means that Nigerians buy chocolate.
Many Nigerians who travel abroad buy chocolate when they come back to Nigeria, which also means that Nigerians love chocolate. This means that there is a market for it. That is how the chocolate (bean-to-bar market) began in Nigeria.
Also, on the global scene, in response to these emerging needs and trends, those who manufacture equipment, started producing smaller equipment for processing, not the gigantic ones that were usually in millions of dollars in terms of value. The smaller ones come for less than $200 a piece. Let's say, a grinder, which is called a melanger in chocolate. You can get a melanger that can produce about two kilograms at less than $200. So, it is not like you are getting a big grinder that will cost about $200,000 or more and is for mass production.
So people felt that there was a need to use the small equipment and then you can easily get a thousand dollars and put the equipment together and get your chocolate business off the ground and to grow in due course.
How much can such a unit produce and at what cost and profitability?
The truth of the matter is that the chocolate market is still dominated by the western world, Europe and North America, to be precise. Nevertheless, the value in returns for the bean-to-bar is in excess of 6000%, if you take it from bean to bar and to the table.
Do you mean 6000% profit?
Not profit yet, but the margin, in terms of percentage. Of course, you are going to invest in equipment, manpower training, labelling and stuff like that. But at the end of the day, the difference is that much. You are going to calculate your profit based on other indices.
When you consider the difference, is it better than selling the cocoa beans. How much interest has this generated locally?
A lot of it. As I am talking to you now, we have nothing less than 15 bean-to-bar micro and medium enterprises. The bulk of them are located in Lagos, as usual. Others are in Abuja, Ilorin, Idanre (Ondo State), and Ibadan. Some of those involved are ladies who were originally pastry and cake makers. Because they make use of chocolate mass a lot, the journey into chocolate making for them was both a business necessity and a response to clients' needs.
What volume do you put on this bean-to-bar segment in Nigeria?
It is an emerging enterprise, so the volume is still low. We are still doing very small quantities. But that they are doing something at all is encouraging. And since they have started, they will grow. That is the most exciting part of it. The market is growing; the demand is expanding. We see increases over the next few years. It is true that it does not cater to the mass market or mass appeal yet. But there is also a level of great interest coming from the middle class in Lagos, in Abuja and Port Harcourt, Warri, also Ibadan, Akure, and so on. That's quite encouraging. So that is quite interesting.
What is the marketing channel like?
A lot of these products are in different malls. Then most of the producers do their sales online. They sell to distributors when they sell offline, but they also do direct deliveries using different marketing and sales channels.
How much of our cocoa beans do these enterprises grind in a year?
If you think about quantity, that may not be significant right now. They may not be doing up to 100 metric tons per year. Most of them do below 10 tons in a year. But in terms of value, it is increasing gradually and over the next five years, we shall certainly see great leaps.
Do you see these local brands competing with the popular foreign brands very soon?
The beauty of the local brands is in the quality that comes out, the freshness and the natural cocoa content; and these automatically make the local brands healthier and fresher. These are absent in the imported brands. The indigenous chocolate makers are particular about the kind of beans they use. And coupled with the fact that these beans are not as old or stale as the ones the international brands use, that gives them an edge in terms of value and taste.
Is there any uniqueness about Nigerian cocoa butter in terms of taste or colour?
There are those who work on special processes of handling the cocoa beans. And under those circumstances, the quality is way better than what you can find in the western world. But I cannot say that for everybody. A number of us are using a backward integration system and farm-gate value addition models to take care of our beans. Let me also add here that local chocolate firms pay more for the beans they buy in order to encourage farmers and their families to produce good quality beans.