A World without Hershey Kisses?
We are on the brink of a worldwide chocolate shortage, but Hershey will stop it nothing to fight global warming and keep accessible and affordable chocolate in the hands of everyday people.
Chocolate lovers are familiar with the term “death by chocolate,” but what about death to chocolate? Regions where a vast majority of cocoa powder is harvested, primarily West Africa, are expected to rise in temperature by 2 degrees Celsius by 2050 and decrease in precipitation (1). Unfortunately, cacao trees, the trees that produce cocoa powder, have a very narrow temperature range and can only grow within 20 degrees north or south of the equator (1). Cacao trees are unusually sensitive to changes in environment because of limited genetic variation, which makes them unable to adapt (2). As seen below in Exhibit 1, climate change will significantly reduce the area where cacao trees can flourish, thereby reducing overall yield for cocoa powder.
Yield is already shrinking, but demand for chocolate is rising because India and China are consuming more every year (4). In 2013, the world consumed 70,000 more metric tons of chocolate than it produced (3). Mars, Inc. believes that this gap will increase to 1,000,000 tons by 2020 if action isn’t taken. In fact, overall demand for cocoa powder is expected to rise by 30% by 2020 (5).
On Valentine’s Day alone, Americans consume over $1.7 billion in chocolate, a drop in the bucket compared to the $98 billion-dollar industry (2). U.S. confection companies have a lot to lose so they’re fighting climate change. The Hershey Company occupies a dominant market position, comprising 44% of the U.S. chocolate industry (see Exhibit 2) (6). To protect its interests and the environment, Hershey is addressing these climate change challenges by (1) ensuring cocoa farmers have the right tools and training for their farms, and 2) building aggressive sustainability programs throughout global operations.
Hershey believes that if they give farmers the right tools and training their business will be stronger going forward (7). Hershey’s “Learn to Grow” (LTG) initiative spans 31,102 farmers across 464 cocoa communities (7). The program rewards farmers who receive certification for sustainable practices with premium payments, encouraging farmers to share best practices (7). Hershey also partnered with the Rainforest Alliance to train farmers across West Africa (8). LTG’s signature feature is a mobile-phone application called CocoaLink that provides relevant information on farming techniques and uses GPS mapping to determine the appropriate spreading of fertilizer. CocoaLink informs farmers about farm safety, pest and disease prevention, crop marketing, and post-harvesting techniques (7). Farmers using CocoaLink have on average improved their cocoa production levels by 40% (7). The program also includes two research centers, a school, and four clean water projects (7). LTG will not only maximize yield long-term for cocoa farmers, but also reduce climate change by improving their health, income, schooling, and farm efficiency.
In addition to cocoa sustainability, Hershey engages in an overall environmental sustainability policy. The company was one of the first to sign on to the White House’s American Business Act on Climate Pledge (9). Hershey made a significant number of commitments, such as: reducing greenhouse gas emissions by 50%, improving recycling rate to 95%, and reducing water usage by 25%–all by 2025 (9).
In addition to those commitments, Hershey is already engaging in sustainable practices, including:
- Sourcing palm oil from socially responsible providers to fight deforestation (10)
- Refurbishing old factories into LEED-certified facilities (11)
- Water-efficiency projects through manufacturing operations (11)
- Reducing packaging by .05 grams, saving 271,800 pounds per year (11)
- Having a “zero-waste-to-landfill” policy (11)
The current practices Hershey engages in are extensive, but there are two specific things they could do to further address the cocoa sustainability challenges:
- Invest money in developing genetically modified (GMO) cacao seeds These seeds are engineered to be more resistant to drought and less sensitive to temperature change and fungi. There is a large academic-led initiative to develop GMO cacao seeds. For example, the Cocoa Research Center in Trinidad has sequenced a new seed called CNN-51 that it claims is more resistant to pests and fungi (12). Hershey has instead decided that to be GMO-free in all its chocolate–becoming more reliant on cacao seeds that are unlikely to survive long-term climate change (13). The company should realize that GMO cacao seeds are the future viability of the industry and get on board.
- Shrink the size of its average chocolate portion Hershey’s rival Cadbury has shrunk the size of its chocolate portions by 10% to address the current and future shortages in cocoa (3). Hershey should consider shrinking its portions so that it can meet current annual demand for chocolate and have a greater chance at surviving future shortages.
Despite the room for improvement, Hershey should be applauded for its aggressive response to climate change and the commitments it has undertaken. I hope this means my grandchildren will still eat Hershey kisses.
Student comments on A World without Hershey Kisses?
When it comes to GMO seeds and products in general, it’s very interesting to me how “pro-GMO” is often portrayed in popular culture and media as “anti-environment”, despite very limited evidence to support that. I’m curious how much of Hershey’s decision not to go into GMO is driven by their own corporate mission and policy vs. (1) not feeling enough supply pressure yet to warrant the investment and (2) fear of a negative perception of GMO further down in the supply chain (among retailers, consumers, etc) especially in more upscale markets and in Europe. To your other solution – shrinking portions of chocolate would be unacceptable to me.
Parker, thanks for the PSA on this urgent issue. To echo Alex’s thoughts, your article skillfully highlights how GMO crops can be an integral part of a holistic response to climate change. The automatic recoil we often see to GMO crops, especially from European leaders, is simply irrational. GMO crops can provide the resilience and flexibility we will need in a world wracked by climate change. I think its incumbent on business and academia to take a public stand against misinformed public opinion. Maybe Hershey can help lead the way?
In terms of reducing the chocolate portions of its product, it seems to me that Hershey will have to be careful about how it approaches this tradeoff. Reducing the chocolate portion obviously comes at the expense of product quality, so Hershey will need to perform extensive market research with consumers to know how much it can actually reduce the chocolate portion before the quality deterioration turns off its consumers.
Oh noooo, I love chocolate! I agree with Alex – shrinking portions of chocolate is absolutely unacceptable! I feel like there is more room for Hersheys other than producing GMO cacao seeds. Like how wineries have discovered dry-farming, Hersheys might want to focus on different ways of growing cacao treest other than genetically modifying them. Also, they can definitely double-down on reducing it’s packaging and also using more eco-friendly materials for packaging.
Parker, thank you for this perspective!! It’s interesting to learn about the chocolate industry and how Hershey’s is addressing the climate change with suppliers.
I agree with you that I can’t imagine a world without Hershey’s kisses, but I’m concerned about the use of GMOs. Changing the DNA of the seeds can help increase the yield, but if those seeds are spread across different crops, they can have a negative impact in the soil and ecosystem where cacao grow.
I hope Hershey’s can spend more resources researching about GMOs, and find a solution that helps the company maintain a profitable business while taking care of the natural resources of the countries that supply cacao.
This is a great post and a really interesting perspective. I agree with the concern above about GMO-usage. When I first read it, I immediately had a negative perception and I think other consumers would too. It would take a lot of education for Hershey to explain the intent and outcome and how it’s not what we think it is.
I think a clever way to reduce portions is to tie it in with the trend of healthier eating. I was actually surprised to read that consumption is expected to increase, particularly with the trend of healthier eating, calorie counting, etc.
Perhaps Hershey could introduce small portion sizes but market them as lower calorie portions. Cadbury did this with “Cadbury 100-Calorie Thins” and they were pretty successful (as far as I know). I have to imagine consumers appreciated the opportunity to have their chocolate but in a smaller bite.
Either way, I think this post is really interesting and I’m happy to see Hershey is taking action. Thank you!
Thanks Parker for the insight. As we discussed in class, Hershey is responsible for addressing the environmental problems that their suppliers are facing, and I am encouraged to see that they are taking action. I am impressed that their initiatives not only target the long-term environmental sustainability of the farms, but also the health, education, and income of the farmers. Hershey is an industry leader and I hope others follow in its footsteps.
I think reducing the portions is an interesting tactic but I would be cautious to implement this strategy as West Africa’s economy is driven by global demand and consumption for chocolate. One of Hershey’s goals is to improve the lives of its farmers and I fear that a depressed economy as a result of decreased demand could undo the positive impact Hershey is making.
Parker – this was one of the first blog posts I read and was very impressed by the level of knowledge you have on this topic. I also appreciate this post since chocolate is a product we all consume and love. I’ve always been mindful of climate change but this post made it even more real. I like the suggestions you have for Hershey. Around the topic of genetically modified cacao seeds, I have two questions.
First, I personally am fine with GMO food items but know the broader public isn’t. How would you propose we get the public comfortable? Second, what is the ETA on having a version of the cacao seed that can be used for commercial use? Hope it’s soon!
Great post Parker! It seems that the problem posed by droughts as a result of climate change are not only going to affect Hersey’s and its sweet kisses, but the entire $5 trillion agriculture business. The combination of growing populations and increasing droughts and floods caused by climate change are inevitably going to have a massive impact the availability of food globally. I believe that we are going to need to adapt as a civilization to be able to feed the world’s population. I think that developing more drought resistant seeds would be a great innovation to keep food supply high and prices low for the world. As evidenced by the variety of perspectives of GMO’s in the above posts, they are a very controversial topic. I think that developing GMOs that enable crops to thrive under heavy use of pesticides (i.e. Roundup), is a very different conversation than developing GMOs that require less water consumption. If Hersheys goes down this path, I think it will be important for them to communicate these differences. Finally, simply making smaller kisses (they are already so small) doesn’t help our climate change induced looming global agriculture crisis.
Great post. Dives into a lot of the nuances of the cacao business and all that Hershey is doing to make a difference in sustainability in the space.
Full disclosure, I worked on a chocolate stat up in college… Don’t let Hershey off to easily though! To play devil’s advocate, I do wonder how much of the new sustainable practices are in response to the lawsuits irt child labor and working conditions on cacao farms of the big chocolate producers (http://fortune.com/big-chocolate-child-labor/). Not until recently has Hershey and others incentivized sustainable practices, contrarily they imposed a lot of the substandard measures of past. I don’t discredit the work that Hershey is doing to bring in cutting edge sustainability techniques to farmers, increase longevity of yields, and improve income and conditions for the indigenous farmer populations, but I wonder how much of the problems they are solving for did they create themselves?
If Hershey wants to get serious about sustainability practices in cacao harvesting, they could adopt the models of the emerging fair trade chocolate companies that have recently flooded the market:
Also check out the company I mentioned, who promote truly sustainable agroforestry: