Concentration of the Chocolate Industry Continues

Several news outlets reported today that ADM, one of the largest commodity brokers in the world, has acquired Germany’s Schokinag, one of the largest European makers of chocolate and cocoa powder. “This acquisition will be an excellent fit for our business as we continue to enhance our global presence across the entire cocoa and chocolate value chain,” said ADM’s Cocoa and Milling vice president Bemis.

ADM used to be the middle man in the chocolate value chain, transporting and storing cocoa beans from producer countries to chocolate manufacturers in Europe and North America. But those days are long gone. For some years now, ADM has been a presence in the North American and British industrial chocolate market with brands like De Zaan, Ambrosia and Classic Couverture. Now it will assume a similar position in Europe.

You chocolate lovers out there won’t recognize these names, of course, but you can bet that much of the private label chocolate and chocolate confections you buy are made with chocolate from such industrial makers. The other big names in this field are, of course, Cargill and, as I reported earlier, Barry Callebaut.

What this means is that the non-premium market for chocolate will increasingly be controlled by a very small handful of firms. But what is also important is that the processes along the value chain are also in fewer and fewer hands. Fewer options and fewer choices for consumers and producers.

Even more worrisome is that ADM has a history of using its dominant position for illegal activities. Its executives were convicted for price-fixing in 1999, the company paid $100million in anti-trust fines and $400 million in settlement.  It is a big polluter and one of the largest recipients of corporate welfare (at least before the current bailout) in the form of ethanol and other farming subsidies.

Makes you wonder whatever happened to competition and markets.

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