A U.K. chocolatier part-owned by Ghanaian cocoa farmers contends with currency fluctuations as it expands abroad.
Learning to be a successful exporter is a tough challenge for most businesses. But since the Great Recession, exporting has proved both more important than ever—but also a lot more challenging.
"The great thing about expanding into the U.S. is that it is like doing another start up," Sophi Tranchell, who runs Divine Chocolate, a United Kingdom-based chocolate maker, told me. "We have a fantastic team in the U.S. and they're like a brand new business—so that's a new lease of life. But they have the advantage that most start-ups don't have (and that we didn't have when we started) which is that they have a fully fledged product range!"
The Divine Chocolate product range includes chocolate bars, Advent calendars, mints, pralines and holiday gifts. Founded in 1998, the company has two great claims to fame: first, it makes seriously delicious chocolate; second, 45 percent of the company is owned by the Ghanaian cocoa farmers who supply the cocoa beans to make the chocolate. You could call Divine a seriously commercial, seriously social enterprise, with an ownership structure designed specifically to ensure that everyone does well from the company’s success.
In the U.K., that success has been established for many years. But the U.K. is relatively tiny so breaking into the U.S. market represented a huge challenge.
"The really nice surprise has been how much resonance the farmer-ownership story has. Two of our women farmers came over for two weeks. They had meetings at the Department of Labor, at the U.N. and at the Department of Labor. And those places are now selling their chocolate in their canteens. So it’s fantastic that the products are getting into those canteens serving people who impact policy."
"The horrid surprise has been the exchange rate. Over this period, we’ve seen exchange rate fluctuations of up to 30%. When we first got people in and they were asking for financial information, we spent all the time changing the business plan because the sensitivities weren’t big enough. We were spending more time on financial models than on selling chocolate! When you’re an established business (as we are in the U.K.) you can cover yourself by buying currency forward. But in the U.S. we can’t do that until we are established and profitable—which won’t be until next year—so we’ve been enormously exposed. Eventually we had to say to some companies, 'Do you want us to sell business plans or sell chocolate?'"
Now selling through Whole Foods, Duane Reade, Wegmans, Cost Plus World Market and online, the U.S. arm of Divine has seen 30% growth this year. Next year, Tranchell expects they will become profitable. So despite an awful economy, Divine Chocolate has achieved what most CEOs dream of: an established business with start-up growth rates.