Baines, Fill & Page, Marketing 2e, Chapter 19
Who to work with: Ethical Dilemmas at Day/Divine Chocolate
Iain A. Davies
Cranfield School of Management
Cranfield University
Introduction
The Day Chocolate Company or Divine Chocolate Ltd. since 2007 (Divine) is a 45%
Ghanaian producer owned Fairtrade® licensed company operating out of offices in
London. (See website) It distributes fair trade chocolate manufactured by Weinrich in
Germany with cocoa (and more recently sugar) accredited by the Fairtrade Labelling
Organisation as Fairtrade® (a mark designating producers that have been audited to meet
a minimum set of standards entitling them to a higher than standard market price).
In this case we investigate some of the major ethical dilemmas that faced this growing self
styled ethical organisation in meeting both its growth and profitability objectives whilst
maintaining its ethical image.
Background
Divine was founded in 1997 as a joint venture between fair trade supply chain
management company Twin Trading, Ghanaian cocoa growing co-operative Kuapa Kokoo
and cosmetics retailer The Body Shop. It followed on the back of the success of Twin
Trading’s previous joint venture Cafédirect, which targeted the growth of fair trade coffee
into mainstream competition. Similarly Divine was formed to spearhead the mainstreaming
of fair trade chocolate sales. (Read more about Divine’s history)
Divine released its first product Divine Milk Chocolate in1998 backed by some heavy
advertising spend by then owner The Body Shop. Following some success a children’s
chocolate bar Dubble was released in combination with aid charity Comic Relief in 2000,
again in a media blitz around Comic Relief’s fundraising telethon Red Nose Day, including
sponsorship of the first Celebrity Big Brother, a children’s “design the packaging”
competition on BBC 1 children’s flagship Blue Peter, and multiple high profile celebrity
endorsements on TV, radio, and newsprint.
With burgeoning sales and growth in product ranges including Dark, Milk, Coffee, Mint and
Orange Flavour Chocolates plus novelty chocolates such as Chocolate Eggs, Easter Eggs
and Advent Calendars the company has become a great success. The company has also
been able to capitalise on its good brand to undertake supermarket own labelling
initiatives with The Co-operative Retail Group (CRG), Sainsbury’s and Starbucks. The
company has grown turnover to £9 million per year in ten years from a team of less than
20 full-time employees (less than 15 until 2006).
Fair trade
In its infancy fair trade in commodity markets like coffee and cocoa was a movement to
protect producers from underdeveloped southern states from the impact of market
fluctuations. There was a feeling this was needed as many countries formally colonised by
principally Western European countries no longer benefited from the preferable trading
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Baines, Fill & Page, Marketing 2e, Chapter 19
schemes put in place to protect single crop economies created during colonial times. As
the idea took off fair trade became a bigger issue and was seen as an alternative to aid in
helping people out of poverty.
Nevertheless, a number of individuals have questioned the fairness of fair trade itself.
Weber (2007) complains that fair trade neither lives up to its promises to growers with only
13% of fairtrade licensed product actually being purchased for fair trade and bemoans the
hijacking of the fair trade agenda by non-ideologically driven organisations such as Nestlé.
Bhagwati (1995) contends that the move away from free trade to fair trade represents rich
countries trying to impose their values on poorer nations as preconditions for liberalisation.
Moreover, Maseland and De Vaal, (2002), although in general supporting fair trade,
suggest that the protectionism indicated by fair trade could damage competition and
Young (1995) suggests that the wage inflation fair trade would cause would be
destabilising to world markets.
Some members of industry are in agreement with the sceptics. Specifically in answer to
calls for fair trade in the cocoa industry, David Kappler (Director of Cadbury Schweppes)
stated:
“[T]he price of cocoa is at a relatively low level but it is a global commodity.
What you would find if you raised prices artificially, is that there are a number of
other regions of the world that could grow cocoa and they would suddenly start
growing cocoa and fairly rapidly there would be a significant surplus of cocoa in
the world. This would mean that the price would probably fall below current
levels” (Kappler, 2001, p 18)
Sales in fair trade however have continued to increase, and despite lobbying from parties
such as the Confederation of British Industry and the British Soluble Coffee
Manufacturers’ Association the UK Government has been in strong support of fair trade as
an answer to poverty alleviation.
Dilemmas at Divine
As with other mainstream orientated ‘Fairtrade Companies’ (see Davies, 2007), Divine
was founded with two competing objectives:
1. increasing sales volume / profit and spearhead fair trade into the mainstream
2. the ideological mission based on two principles:
a. Having close relationships with fair trade licensed, developing world
producers and assisting in their growth through higher prices and
community projects
b. Influencing change in the current market system to improve conditions and
income across the entire market
The two objectives can often be in stark contrast which from the outset caused some
friction with the fair trade fraternity:
“Day Chocolate Company … started off on a commercial footing. It was not a
niche product starting off only going into fair trade shops…. The theory behind
[Day] was that of mainstream products, that were to be got in supermarkets.
There was, back when Cafédirect started in mid 1990’s, a definite battle within
the fair trade movement. What was important for the fair traders was that fair
trade was to be alternative trade the whole way through and only sold in
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Baines, Fill & Page, Marketing 2e, Chapter 19
alternative shops. This is fine and dandy if you have ten nut producers and want
to sell one bag of nuts, but not if you want to increase your sales”. (Senior
Divine Employee)
With such conflicting objectives Divine has had to negotiate some pretty difficult ethical
dilemmas. Some of the largest of these have been related to who Divine should partner /
work alongside.
One of the principle reasons for the success of Divine has been its ability to build and
exploit its relationships with other organisations (see Davies, 2008). Divine learnt about
the food industry from CRG, gained advertising expertise from The Body Shop, wholesale
distribution from Equal Exchange, access to 35,000 campaigners and 200,000 peoples’
homes through Christian Aid, free multi-media advertising through Comic Relief and many
hundreds of other well exploited business relationships. (Find out more about Divine’s
business relationships) This however has come at a price.
A number of contentious decision-making moments have occurred over the company’s
short history. The paragraphs below set out examples of five of these issues:
1. Supermarket fair trade own-labels: Divine have been highly active in the ownlabelling initiatives of supermarkets in the UK. The quote above indicates the
original resistance to fair trade being sold through supermarkets, but being the
provider of the supermarket own brand raises this to a further level of ethical
dilemma. Divine are no longer simply selling through the supermarket but are
ratifying (or in some cases being) the supermarket’s ethical claim. The reason for
resistance was the perceived hypocrisy of a movement based on reducing
exploitation of the supply-chain (fair trade) working with and assisting organisations
famous for the pressure they put on their own supply chain. The justification
provided by Divine was that, through them controlling the own brands, a true fair
trade company would be controlling the system rather than leaving it to a nonideologically led third party.
2. Shell: An issue arose when one of the sales team thought about approaching
Royal Dutch Shell in relation to retailing the Dubble bar through its petrol station
outlets. Shell had recently been in the spotlight following the execution of Nigerian
Anti-Shell Activist Ken Saro-Wiwa and the Ogoni 8, which many felt Shell was in a
position to prevent. Sophi Tranchell the Managing Director of Divine helped lead
the “Boycott Shell” campaign whilst holding the position of chair of Anti-Apartheid
London making this a dilemma of increased sensitivity. After much discussion and
deliberation the decision was taken that to sell the product did not indicate any
formal relationship that could jeopardise the ethical image of Divine. This was
bolstered by an overall company resolution to allow anyone to stock the chocolate
no matter about “chequered” ethical histories.
3. McDonald’s: After the Shell incident a further issue arose when two of the
marketing team began discussion the possibility of a Divine-McFlurry perhaps to
accompany a Red Nose Day Appeal. McDonald’s have long been the high profile
scapegoat for any number of boycotts, court cases and challenges for everything
from childhood obesity to rainforest destruction. Following on from the Shell
decision it may be assumed that McDonald’s would have been approached to
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Baines, Fill & Page, Marketing 2e, Chapter 19
develop a relationship. However in this incident then owners The Body Shop
suggest this was not a great idea and could jeopardise the company’s brand and
the idea was dropped.
4. Advertising to Children: Divine has long been an advocate of educating people
about where food comes from, who makes it and how they live. Their websites are
packed with information about the cocoa industry and games to play to learn more
about cocoa. In fact one of their stated aims is to educate the public about the
sources of food to make people demand changes in the market systems for many
commodity products. The ethical dilemma however is the appropriateness of
advertising chocolate directly to children (since it is fundamentally an unhealthy
product linked to health problems not dissimilar to McDonald’s above). From the
creation of child-centric products (i.e. Dubble’s intended audience) to advertising
competitions with Blue Peter and Nickelodeon and in-school education packs rich
in advertising and evocative rhetoric (co-produced with Comic Relief) Divine has
clearly shown intent towards directly advertising to children. When questioned
about this practice the employees did not see this as an ethical issue in any sense
as the children would eat chocolate anyway – so it may as well be fair trade.
5. Sex Sells: Without doubt advertisers fall to sex as a major sales appeal with
regularity. Despite its predominantly female (and strongly feminist) workforce Divine
chose to partake in the Daily Star page three girl Valentine’s Hamper Competition
to increase their exposure. Despite this however the company has generally tried to
avoid relying on sex to sell the product and clearly stated they would not advertise
in Mens’ Magazines like Loaded or FHM because of the belief by many fair trade
protagonists of the sexually exploitative content. There therefore appears to be a
contradiction between one set of decisions and another regarding what classes as
a damaging level of sexual exploitation.
Questions
1. Is fair trade fair? Consider the arguments above and think back to the normative
decision-making models in chapter 20. By what rationalisations is fair trade “ethical”
and by which is it not?
2. Look back at the ethical dilemmas faced by Divine. What are the rationalisations
used to make the ethical decision on whom the company will work with and which
normative methods best represent the decision-making style?
3. Divine is often termed as an “ethical organisation”. They sell fair trade products are
owned and share profits with the Ghanaian growers, and have a strong ideology.
yet some of its sales and marketing may appear unethical. What makes something
an “Ethical Organisation” and what is “Ethical Marketing”?
Note: Further information on this case can be found in Davies, I. A. and Crane, A.: 2003,
“Ethical decision making in Fair Trade companies”, Journal of Business Ethics, 45: 79-92
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Baines, Fill & Page, Marketing 2e, Chapter 19
References
Bhagwati, J. (1995) ‘Trade liberalisation and "fair trade" demands: Addressing the
environmental and labour standards issues’ The World Economy, 18/6: 745-760
Davies, I. A. (2007) ‘The eras and participants of fair trade: An industry
structure/stakeholder perspective on the growth of the fair trade industry.’ Corporate
Governance, 7/4: 455-470
Davies, I. A. (2008) “Alliances and Networks: Breeding Success in the UK Fair Trade
Market” Journal of Business Ethics, forthcoming
Maseland, R. and De Vaal, A. (2002) ‘How fair is fair trade?’ De Economist, 150: 251-272
Young, L. W. (1995) ‘Free or fair trade?: NAFTA and agricultural labor’ Latin American
Perspectives, 22/1: 49
Weber, J. (2007) ‘Fair trade coffee enthusiasts should confront reality’ Cato Journal, 27/1:
109-117
Kappler, D. (2001) Quoted in ‘fair trade chocolate – the argument continues’ Corporate
Finance, 204: 18
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