Made in Madagascar: US chocolate company defying the status quo
With its unique combination of climate and soil, Madagascar’s Sambirano valley, situated in the north of the country, is well-known for its high quality cocoa. In gourmet chocolate website Seventypercent.com’s ranking of the world’s top 10 chocolates, four of the top products are made with cocoa from Sambirano. Most of these companies merely import the raw cocoa beans from Madagascar while the actual chocolate is made abroad. However, a US-based company, Madécasse, is following a different path, producing the entire chocolate – from bean to bar, including the wrappers and boxes – within Madagascar.
From volunteers to businessmen
The story starts over a decade ago when Americans Tim McCollum and Brett Beach were Peace Corps volunteers in Madagascar. Although they lived in tough conditions with only about US$90 a month each to get by on, McCollum describes the three years as “inspirational”. “We really enjoyed it. It was a cultural experience for us. We were able to learn the local language and culture, particularly on a village level,” he told How we made it in Africa in an interview.
Six years after their Peace Corps stint, the pair got reunited and started working on an idea to start a business in Madagascar. Neither McCollum nor Beach had any knowledge of chocolate manufacturing and stumbled on it by change. They first started producing vanilla extract and as they got more involved in the speciality food market, realised that many of the gourmet chocolate companies source their cocoa from Madagascar.
“Many of these companies have never even been to Madagascar or know where it is on a map. We thought that with our knowledge of the country we can do something that has never been done before,” says McCollum. “We wanted to prove that Madagascar is not just a source of great cocoa, but that you can make this beautiful fine, finished chocolate that can be better than most chocolate that is made in Switzerland, Belgium of France.”
Every process in the Madécasse value chain happens within the borders of Madagascar. Cocoa is bought from local farmers to whom the company also provides training. After the cocoa is harvested, fermented and dried, it is transported to the factory where it is processed into chocolate. Madécasse doesn’t own the factory but has an agreement with a local manufacturer. About 85% of the factory’s production is currently dedicated to Madécasse.
The company’s main market is the US although sales in South Africa, where it works through a local distributor, is also growing. According to McCollum, Madécasse currently produces 60,000 chocolate bars a month. It has three full time staff members at its head office in New York, two in San Francisco and 16 in Madagascar.
Beyond Fair Trade
On the back of its chocolate wrappers, Madécasse claims that by keeping all manufacturing in Madagascar, local farmers benefit four times more than they would have from the Fair Trade system.
Most of Madagascar’s cocoa is exported through a series of middlemen who each take a cut, leaving the farmers with very little income. Madécasse, however, buys directly from the farmers. “We removed four or five layers of middlemen and deal directly with the farmers. Because of this we are able to offer a higher price to them, while still being able to pay a low price compared to other people sourcing cocoa,” says McCollum. Madécasse has also signed contracts with the locals, which guarantees the farmers of a fixed price for their cocoa, giving them more stability.
According to McCollum, there has been a definite change in the living standards of the local community. “They’ve never had electricity in the 500 years the village has been there. From the cocoa money they were able to buy a generator.”
Doing business in Madagascar
McCollum says although manufacturing costs in Madagascar are cheaper than in the US, the company takes on considerable risk by having their factory in the country. He explains that Madagascar has significant potential, but that the business environment is challenging. Poor electricity supply, inadequate transport infrastructure, corruption and a lack of skilled labour are some of the major hurdles. “It basically has all the problems that any other African country has.”
In addition, he says that it is often difficult to synchronise the slow pace of life in Madagascar with the demands of the US market.
Although Africa has abundant resources, most of these are exported for processing abroad. While many African countries are looking to boost their manufacturing sectors, this cannot be done without the required infrastructure and a trained workforce. The Madécasse story is indeed very inspiring, but Africa will need many more such examples if it wants to turn its current growth spurt into sustainable development.