Nina Langen and Monika Hartmann

1. Chocolate Brands’ Communication of Corporate Social Responsibility in Germany Nina Langen and Monika Hartmann

2. Theoretical and empirical research reveals: Ethical branding can provide a critical point of differentiation • Firm‘s CSR activities • Stakeholders‘ response • Firm’s intangible assets • Evaluation of and • Loyalty • Trust in the company Relevance The Study Results

3. Theoretical and empirical research reveals: Ethical branding can provide a critical point of differentiation • Firm‘s CSR activities • High level of complexity • Credence attribute • Stakeholders‘ response • Buy • Boycott Information asymmetry Signalling / Communication Relevance The Study Results

4. Research Question • Firm‘s CSR activities • High level of complexity • Credence attribute • Stakeholders‘ response • Buy • Boycott Information asymmetry Signalling / Communication (How) do chocolate manufacturers communicate their social and environmental engagement to (which) stakeholders? Relevance The Study Results

5. Chocolate: Relevance for CSR SupplySide Demand Side • Most important producing country: Ivory cost • 40 % of global cocoa production, 66 % of the cocoa processed in Germany • Problems: deforestation, child labour, non-sustainable wages • Companies producing chocolate • Can influence environmental impact of cacao production • Can change producers’ livelihood • One of the most favoured luxury food in Germany • 11.4 kg/person/year consumed • Second most important importer of cocoa after USA • Surveys: German citizens • Are strongly against child-labour • Care about externalities and ecological production Relevance The Study Results

6. Chocolate: Relevance for CSR SupplySide DemandSide • Certification of cocoa is considered as • an effective strategy to advance producers’ livelihood • reduce environmental problems • CSR activities of companies in the chocolate industry can serve as important differentiation strategy if communicated Relevance The Study Results

7. Potential CSR communication channels • CSR reports • Advertisement, in e.g. the store, print media, TV, radio, internet • (Certified) labels on product packages, such as organic, Fair Trade • Cause-related Marketing activities Standard in Europe Visible at the POS Relevance The Study Results

8. What is Cause-related Marketing (CrM) Marketing tool where product purchase leads to target-oriented donations regarding a designated cause which is promoted on the product by label Relevance The Study Results 8

9. Study design 1st Market analysis in 12/2011 (Pretest 12/2010) in Bonn Complete inventory count of chocolate products Discounter: Aldi Süd, Lidl Full-range provider: Edeka, Real, Rewe Organic supermarket: Basic Organic store: Bergfelds Store: Kaufhof Focus: CSR communication on the products 2nd Web analysis in 01/2012 (Pretest in 01/2011) Analysis of CSR communication on web pages of 6 retail brands 10 organic/Fair Trade manufacturers brands 31 conventional manufacturer brands Primarily private brands Only manufacturer brands Relevance The Study Results

10. Market analysis 12/2011 • 1001 chocolate bars analyzed • 293 if not considering different flavors • 57 with CSR label (20 %) • 18 in conventional retail stores • =>Pretest 12/2010 – NONE • % of chocolate assortment with CSR-label • Conv. : from 0 % (Aldi) to 13 % (Lidl) • Org.: 100 % (without organic label 46 %) • CSR Labels on private as well as manufactured brands • CSR label: Social and ecological 3rd party certified production (organic, Fair Trade, Rainforest Alliance, UTZ certified, others) RelevanceThe Study Results

11. Unweighted average price of chocolate bars in Euro/100 g in 2011 with and without CSR labels

12. Results of the web analysis – selected brands • Lindt & Sprüngli • high-price chocolate, not available at the discount • Ritter Sport • medium priced, available at the discount as well as in full-range supermarkets • Choceur • low-price private chocolate brand only available at the discounter Aldi Süd RelevanceThe Study Results

13. Brands selected - Lindt • Lindt & Sprüngli is located in Kilchberg/Switzerland • Sales volume of EUR 1.9 billion in 2009 • 7,409 employees • 100 g of chocolate cost EUR 2.20 • The impression and brand image is high quality due to Swiss production

14. Brands selected - Ritter Sport • Ritter Sport is sited in Waldenbuch/Germany • Sales of the company amount to EUR 274 Mio. in 2009 • 800 employees work for Ritter Sport • 100 g of chocolate costs EUR 0.85 • The image is ‘dynamic’ which is influenced by advertisement and the chocolates quadratic form

15. Brands selected - Aldi Süd • The home of Aldi Süd is Mülheim/Ruhr/Germany • Neither sales volumes nor number of employees reported • 100 g of chocolate of the private brand Choceur cost EUR 0.35 • Aldi is the most trusted retail brand in Germany

16. Keyword Analysis To assess the chocolate manufacturers CSR communication systematically the analysis started with the search for the following keywords on the respective websites: • Sustainability • Environment • Social • Responsibility • Health • Animal welfare • Engagement • Company • Sponsoring • Charity • Activities 16 RelevanceThe Study Results

17. Results of the Keyword Analysis Communication of CSR is of considerable greater relevance for Lindt and Ritter Sport compared to Aldi Süd

18. Web page analysis - Lindt RelevanceThe Study Results

21. Web page analysis – Lindt: Assessment • CSR information available on the website • Very detailed • Very comprehensive • Covers all dimensions of CSR • Company • Not only member in some international organisations, such as the UN Global Compact and NGOs • Also initiated own projects related to cocoa production • Information only in English, except the annual CSR report RelevanceThe Study Results

22. Web page analysis – Ritter Sport RelevanceThe Study Results

26. Web page analysis – Ritter Sport: Engagement • Ecology • Enhancement of production processes • Product package • Logistics • Energy seems to be an important field • Energy efficiency measures presented • Information given which energy is used in production process • Awards mentioned, e.g. ‘Ökomanager des Jahres’, given to the CEO RelevanceThe Study Results

27. Web page analysis – Ritter Sport: Details • Long-term engagement in Nicaragua: small-farm cocoa production for Ritter Sport in a cooperative founded in 1990 • Comprehensive information provided regarding the cooperative and social implications for producer families • A film also placed on the webpage • Art sponsorship information: • less detailed than information available for the other two issues • Only shortly states that sponsorship of young artist is regarded as investment in future RelevanceThe Study Results

28. Web page analysis – Ritter Sport: Assessment • Engaged in all three dimensions of CSR • Ritter Sport is • No member of international organisations concerned with issues such as child labour or sustainable production (or at least does not communicate this) • Focuses its CSR activities on own initiatives, e.g. • Nicaragua engagement related to the sustainable production of chocolate • Promotion of art in developed countries • It remains unclear how much money is attributed to the projects RelevanceThe Study Results

29. Web page analysis - Choceur RelevanceThe Study Results

33. Web page analysis – Aldi: Assessment • CSR info primarily provided regarding engagement for ecology • Most of the activities have not only an effect for the environment but also for the profit of the company, e.g. the improvement of logistic reduces CO2 emissions and safes money • Social dimension of Aldi’s CSR involvement mainly given by providing information on firm’s membership in international organisations (e.g. ILO) and initiatives (e.g. BSCI). Links all lead to anglophone webpages • The average German consumer might have difficulties to learn more about Aldi’s CSR engagement • No specific engagement mentioned regarding the production of cocoa and chocolate RelevanceThe Study Results

34. Summary: Web page analysis • Considered brands provide information regarding CSR activities on web-pages • Information differs considerably in amount, presentation, and CSR areas covered • High-price brand Lindt & Sprüngli: engaged in various different projects to mitigate social and environmental problems related to cocoa production • Medium-price chocolate brand Ritter Sport: as Lindt & Sprüngli. In addition engaged in projects related to art • Low-price supplier Aldi Süd: reports no engagement with respect to cocoa production RelevanceThe Study Results

35. Internet Analysis: Overall results Most of the 47 companies communicate CSR related information on their websites Exceptions: e.g. Trumpf-Schogetten; Alpia, Feadora Considerable heterogeneity in form and amount of CSR related communication On average, most comprehensive by organic/Fair Trade manufacturer brands and least so by retail brands Exceptions: Lidl and Rewe Cocoa production not always addressed on CSR sites Formality of communication Highest by retailers (addressee: NGOs, etc.) Relative low by manufacturer brands (addressee: consumer) Neither price nor enterprise size seem to determine the level of CSR communication 40 RelevanceThe Study Results

36. Formality of communication  Who is adressed? • Stakeholder groups, e.g. activists and NGOs • CSR communication in this respect might be primarily seen as reducing pressure from those groups thereby maintaining the ‘license to operate’ • Further qualitative analysis, e.g. • Focus groups with consumers to gain insights into consumers’ feelings when being informed about problems related to production of cocoa • Expert interviews with managers could help to understand the motivation not to advertise CSR involvement directly to consumers RelevanceThe Study Results

37. To sum up • Firm‘s CSR activities • High level of complexity • Credence attribute • Stakeholders‘ response • Buy • Boycott Information asymmetry Signalling / Communication Research Answer: Yes, more in the internet than on products, form and level very heterogeneous • Open questions: • Which determinants can explain heterogeneity in CSR communication? • How do stakeholders perceive CSR communication in the chocolate sector and what are the influencing factors? • Better use scanner data?

38. Thank You Chocolate Brands’ Communication of Corporate Social Responsibility in Germany Nina Langen and Monika Hartmann

39. By working with a strict Code of Conduct , UTZ CERTIFIED sets stringent requirements for the farmers when it comes to the sustainable growing of coffee, cocoa and tea. Farmers are trained in the area of business skills, labor conditions and environmental protection, and their operational management is checked by independent third parties. The UTZ CERTIFIED traceability system subsequently guarantees that the raw materials have actually been grown and harvested in a responsible manner.

40. Number of chocolate bars sold in the market with and without CSR labels in 2011

42. Internet Analysis – retail brands Six retail brands Lidl, Aldi Süd, Rewe, Real, Edeka, dennree Language German Most detailed information Lidl and Rewe: adressing the society, environment (only within Germany) and employees Cocoa production adressed By none of the retail brands Addressee CSR professionals and consumer Figures provided No 47 RelevanceThe Study Results

43. Internet Analysis – organic/Fair Trade manufacturers brands Ten brands Language All German; Gepa: Spanish, English; Natudis; Pronatec, Rosengarten, Vivani: also English Most detailed information Engagement for not only the local but also the global environment Fair communication and handling with suppliers addressed by 7 Cocoa production addressed By Gepa, Naturata, Rapunzel, Zotter Addressee consumer, information provided in less formal manner compared to the retailers Figures provided Some, e.g. Rapunzel and the Hand in Hand project 48 RelevanceThe Study Results

44. Internet Analysis – manufacturer brands 31 brands Language Extremes: Several: Milka, Ritter Sport, Zentis. No German: Marabou Most detailed information No CSR info: Aero, Alpia, Feadora, Johan Lafer Confiserie Collection, Lohmann, Piasten Schokolade Cocoa production addressed By Balisto, Hachez, Milka, Ritter Sport, Valrhona Addressee Consumer: more hands-on communication via interactive games, music, films, photos, see Balisto, Cote D’or, Hachez, Marabou, Milka, Schogetten Figures provided Milka; Hachez explains online their wild cocoa de Amazonas charity promotion 49 RelevanceThe Study Results

45. First insights and further research needs • Awareness in the chocolate sector regarding social and environmental problems related to cocoa production • 20% of chocolate bars provide CSR related labels(organic stores 50% if not counting bio-label) • Most companies communicate their CSR involvement on their websites though to a considerable different degree • Open questions: • What are the determinants that can explain chocolate firm’s different efforts with respect to CSR and CSR communication. • Which role plays CSR communication for stakeholders’ perception and decisions in the case of chocolate and what are the influencing factors. RelevanceThe Study Results