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The Impact of COVID-19 on Small Chocolate Businesses

coronavirus covid19 chocolate industry impact

Over the last week, the Fine Cacao and Chocolate Institute (FCCI) conducted a flash-poll in order to better understand the impact COVID-19 is having on small chocolate businesses. Carla D. Martin, PhD, the Executive Director of FCCI, revealed the first findings of their poll on the 23rd of March in a Youtube video. “We at FCCI have been tracking the COVID-19 impact and hope to better understand the way in which it is affecting small chocolate businesses,” she explains.

Over 120 businesses participated in the poll. These include businesses with annual revenues anywhere from below $100K to larger companies with an average annual revenue above $2.5 million. The FCCI is continuing to collect data so if you’re a chocolate business and you’d like to complete the poll, then please do so here.

One in Five Chocolate Businesses Face Existential Threat

The first findings of the poll reveal a sobering reality of the impact this virus is having and will have not only on the chocolate industry but also various small businesses around the world. Carla announced that “20% [of the respondents] described the impact or the potential impact as an existential threat. Meaning that were the impacts to continue or to become more severe, they are likely to go out of business.”

A further 59.2% claimed that the coronavirus had and is having a significant impact on their organisation. “Meaning that 80% of these businesses overall are describing a very significant to existential threat to their businesses,” explains Carla.

The greatest threat to businesses comes from a drop in sales. Over 70% of the respondents have seen a 50% decrease in sales, a further 17% have even seen sales decrease as far as 90%. The leading causes of sales dropping are the cancellation of events, as well as a decrease in consumer demand.

Shortage of Supplies

As well as the financial impact of the coronavirus, some small businesses are also reporting shortages in supplies. “Companies explained that the shortage of supplies has come down to a few different things. One is a shortage of protective gear or cleaning supplies, which is something that is an issue in the cleaning supply and protective gear supply chain today, so it’s natural that this is also impacting small businesses,” says Carla. “Another is a shortage of supplies because perhaps their cash flow has been so limited that they are unable to invest in the supplies that they currently need.”

However, the findings so far suggest that there hasn’t been severe disruption to the supply chain of cacao. “It does not yet appear as though any of the businesses surveyed are experiencing their own raw material supply chain interruptions, and I think it’s important to emphasize that,” Carla elaborates. “This is not yet evidential of a supply chain crisis in cacao or in chocolate.”

Online Sales: A Glimmer of Hope

Whilst a fifth of the world’s population is on coronavirus lockdown, postage and deliveries are still possible in many countries. This is something many chocolate makers have taken advantage of over the last weeks in order to boost sales in some way. 

In fact, 30% of respondents claimed that they anticipate moving sales entirely online. Carla added that “a small number of companies say they have actually seen an increase in online sales. Most often, seeing that increase has been accompanied by action on the part of those companies to try to drive online sales during this period of financial instability and uncertainty.”

Utilising online sales channels might be a way of navigating your business out of the coronavirus crisis. As much as 59% of respondents are, or anticipate, increasing digital marketing efforts over the foreseeable future.

Looking Ahead for Chocolate Businesses 

These are no doubt stressful times, however, if the right steps are taken many businesses will pull through and be stronger than ever. “The number one thing that was most communicated by the different companies is they felt the strategy that was working the best for them was communicating,” says Carla. 

She explained that there are two communication channels that are integral right now. One is directly to customers. Whether it’s via Instagram, Facebook or your newsletter, keep your audience in the loop on “how [you’re] responding to coronavirus, communicating about how it is impacting [your] businesses and more.” 

The second communication channel is to other chocolate companies and small businesses within your local area. “The communication that people indicated that they are prioritising is among other chocolate companies and among other small businesses in their communities as a way of seeking out different strategies and resources.”

It’s Time to Work Together

“What I strongly recommend that all of you remain as flexible as possible and as communicative as possible so that you can continue to be accepting and adapting to this situation.” In light of the above, the brilliant team at the FCCI has put together a resource guide that links to resources that are available to support small businesses during this time. Please find this guide here.

The FCCI, together with Uncommon Cacao and Craft Chocolate Experience, have partnered to create #stayhomewithchocolate. These are various talks given by various chocolate makers, farmers with the goal of “[keeping] people engaged with craft chocolate as a calm within the chaos unfolding.”

On a final note, Carla leaves us with a message of unity. “If ever there was a moment for event organisers, for awards organisers, for educational organisations to come together and to try and support small businesses in trying to drive online sales, which is one area that is less impacted and where is still some flexibility, this is it.” 

For more information on talks please visit http://stayhomewithchocolate.com/

Key Take-Aways

  • As many as 80% of small chocolate businesses are facing a significant or existential threat due to coronavirus
  • Small chocolate businesses should be focusing on online sales channels now more than ever – this includes increasing digital marketing efforts to drive sales
  • Engage and communicate transparently with your audience through these difficult times

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