United Cacao Ltd SEZC (LON:CHOC) CEO Dennis Melka caught up with DirectorsTalk to discuss Mars Chocolate’s acquisition of Hacienda La Chola commenting: “The transaction validates Latin America as the future of the cacao industry and is particularly interesting as it represents an an upstream production platform for a branded, global confectionary company.”
Mars Chocolate has acquired Hacienda La Chola, a 485-hectare cocoa farm in Guayaquil, Ecuador. The company said in a press release the farm was one of the world’s leading for cocoa yields.
Mars intends to use the farm to scale up its plant science research. The company already owns research farms in Brazil and Indonesia. Benefit to smallholders, says Mars
Andy Harner, vice president of global cocoa & sustainability at Mars, said the farm would allow the company to test findings at scale. “This will be good for Mars, good for the cocoa sector, and good for the livelihoods of farmers around the world,” he added.
Naturisa deal
Hacienda La Chola has 485 hectares dedicated to cocoa and another 84 hectares for mango. Mars also announced it had acquired the agricultural division of Naturisa, the owner of the farm. Naturisa was a shrimp-farming operation that established the cocoa farm in 1995, taking advantage of a newly installed irrigation system in Cerecita to supply the Santa Elena Peninsula.
Cocoa in Ecuador
Ecuador is Latin America’s leading cocoa producer and the world’s fourth largest producer of the commodity. It has the highest production of fine flavor cocoa worldwide. A recent report by Hardman Agribusiness said chocolate makers would look to source future cocoa demand in a thriving professionalized sector in Latin America, moving away from what it called a “structurally blighted” West African market.
It singled out Ecuador for its large-scale plantations and smart irrigation systems. The International Cocoa Organization forecasts Ecuador will produce 230,000 metric tons of cocoa in the 2015/16 season, representing 5.5% of global production, which is concentrated in Côte D’Ivoire and Ghana.
Chocolate confectionery market shares Ecuador
Mars is not among the top three chocolate confectionery companies in Ecuador. Nestlé holds a 24.1% share, Argentinean firm Arcor has 14.9% of the market, while local firm Universal Sweet Industries has 13.7%, according to Euromonitor International. In 2014, Nestlé opened a $16m chocolate molding and packaging line at its plant in Guayaquil that it said would use fine flavor Arriba cocoa beans. At the time, Nestlé said it was the biggest buyer and exporter of Ecuadorian cocoa.
According to Mars’ operational map, the company currently has no manufacturing presence in Ecuador. Its nearest offices are in Lima, Peru. United Cacao Ltd SEZC are an AIM-quoted cacao plantation company also based in Peru.
