Raising Eyebrows

July 28, 2009 17:15

By Anthonie Tonnon

Sitting over the equator, the island of Borneo is the third-largest island in the world and one of the most biodiverse regions left on the planet. It is home to about 15 000 species of flowering plants, 3000 species of trees, 221 species of terrestrial mammals, and 420 species of resident birds. It is also the front line of the world’s ecological crisis. Look at Borneo from space and you will see massive clouds of smoke, which are made from the burning of what is left of the area’s rare peat swamp forests. The environment that supports Borneo’s irreplaceable diversity is being wiped out to make way for farming palm oil. And in the middle of this tragic mess, “New Zealand’s most trusted company,” Cadbury Confectionary, has decided to waltz in and make palm oil their new secret ingredient. It has been a public relations disaster for Cadbury, with the issue gaining attention in the lead-up to Dunedin’s Chocolate Carnival. Cadbury claims they have done nothing wrong, and are in fact leading the world in sustainable sourcing of palm oil. Environmentalists cry greenwash. But with the Carnival now over, and the switch in recipes cemented, who will the consumer believe? And will the new, oily chocolate sell?

Palm singing

Palm oil is an edible oil often labelled as “vegetable fat” or “vegetable oil” in products such as margarine, soap, and chocolate. It has been grown in Africa for centuries, but now a large portion of palm oil on the world market comes from South East Asia. In the last few years global demand for palm oil has soared, due to huge spikes in the price of alternative oils, and the use of palm oil to make biofuels. This rise in demand has led to the clearing of forests, often illegally, to make way for oil palm plantations. It’s not just the companies that buy palm oil that encourage deforestation: land owners who clear forest for palm plantations receive a double incentive as they can make money by logging the forests in the first place. The impact of this deforestation is also double-barrelled. It is destroying the habitats of species like the Bornean and Sumatran orangutans, along with countless other species. Orangutans have declined by 90 percent since 1900, and if deforestation is left unchecked, they will be extinct in the wild by 2020, as by that time, 98 percent of Indonesian forests will have been cleared. But these forests are also a huge part of the climate change issue. Emissions from deforestation in Indonesia (which includes Sumatra and over half of Borneo) generate four percent of global greenhouse gas emissions. And once these forests are gone, we will lose a large part of the world’s lungs. Judith Curran, who is making a documentary series on orangutans in Borneo, has seen areas where the tropical rainforests of Borneo give way to smouldering fields of charcoal as far as she can see. “We lose a soccer field a second, and an area the size of Manhattan a day.” Curran also points out that once a forest has been cleared, the fertile soil quickly erodes and the area starts to become desert: “You can grow oil palm on it, but you won’t grow anything else on it after that.”

Are Dunedinites the new Jaffas?

Cadbury’s switch from cocoa butter to palm oil was primarily driven by a doubling in the price of cocoa butter, but it is just one part of the company’s strategy to improve efficiency and returns in a challenging economic environment. Cadbury has undertaken a programme to rationalise its Australasian operations. Instead of separately producing Dairy Milk chocolate bars in Dunedin, Melbourne and Tasmania, Cadbury has moved all the chocolate bars to Melbourne, and has made Dunedin a “centre of excellence” for producing chocolate crumb (the base ingredient of Dairy Milk). Boxed chocolates have moved from Melbourne to Dunedin, and with the closing of the Auckland plant, the production of Pineapple Lumps, Jaffas, and marshmallow confectionary has moved to Dunedin. While Cadbury has formerly used 100 percent Australian milk for Australian chocolate and 100 percent New Zealand milk for New Zealand chocolate, both markets are now going to have to bite the bullet and eat chocolate that uses a mixture of Australian and New Zealand milk. Eeew, gross! The new, standardised bars are slightly softer than the old ones, due to the palm oil, and a little smaller – king-sized blocks have dropped in size from 250g to 200g.

I don’t remember asking for smaller, softer, more environmentally destructive chocolate

The line that Cadbury has pushed in the media is that consumer testing has consistently said that Dairy Milk chocolate would be better if it was softer. Cadbury’s public relations man Daniel Ellis explains that as chocolate is a highly competitive industry, Cadbury is constantly testing consumer opinion and experimenting with new recipes. Ellis claims that their tests have shown that Australians and Kiwis wanted softer chocolate. These tests were conducted in a range of environments, often in focus groups that involved blind tasting, and Cadbury looked for nationwide trends. From the rush of angry letters to the editor over the new taste, it would seem that chocolate tastes a little different without the blindfold on, especially when negative word of mouth gets around. But Ellis is willing to concede that taste testing was not the only reason for the change, saying that they did expect some negative reaction to the changes. The costs in keeping the same recipe would have meant that Cadbury chocolate would rise in price. Ellis argues that Cadbury is protecting its customers from price rises. “Our customers don’t want to pay more then five dollars for a block of chocolate.”

Sustainable palm oil?

Regardless of the new taste, Cadbury’s move to palm oil has caused a damaging backlash, and attracted major media attention when Auckland Zoo stopped selling Cadbury products at the Zoo. Cadbury’s reply was that it sourced sustainable palm oil as a member of the Roundtable on Sustainable Palm Oil (RSPO), the board members of which include the World Wildlife Fund and Oxfam. Peter Frazer, from Auckland Zoo, contends that the RSPO has made “little progress on sustainability” and that being a member does not make Cadbury sustainable. He points out that while the RSPO controls 35 percent of the world’s palm oil, only four percent of that is sustainable. When I talked to Ellis, he claimed that all of Cadbury’s supply is from that four percent and that they have purchased certificates at a premium price. But Ellis is vague on the exact details of where this comes from, or how it is audited. Judith Curran doesn’t believe that the RSPO is worth trusting to ensure sustainability. Curran says that as the RSPO comprises 90 percent corporations, WWF and Oxfam have little real say, and she believes they are holding on because they believe they feel like they have no other options. Australian group Palm Oil Action claims that there are conflicts of interest involved in the sustainable certification process, and in reality it is very difficult to accurately audit suppliers. They argue that the RSPO can offer no guarantees until they agree to have plantations independently verified. Greenpeace considers RSPO to be “little more than greenwash,” pointing out that at least one RSPO-certified producer – United Plantations, a supplier to Nestlé and Unilever – is deforesting Indonesia’s vulnerable peat land forests.

Even if Cadbury’s palm oil is sustainable, their use of it still contributes to rising world demand for palm oil, and will not stop the destruction of forests. Greenpeace is calling for a moratorium on converting rainforest and peat land into oil palm plantations as the best way to give the forests breathing space. I asked Ellis if this is the right time to be buying palm oil at all. Ellis argues that there is a market for sustainable palm oil, and that Cadbury have taken a step in the right direction by making sure that their palm oil is certified. He argues that Cadbury have been hard hit by bad publicity over palm oil, whereas other companies who do not use sustainable supply have not. Ellis says Cadbury hopes to encourage other companies to switch to sustainable supply. Other palm oil users include Dove soap, Flora margarine, Kit Kat, and Persil washing powder.

Curran doesn’t argue that palm oil in itself is a bad product: she says that small-hold farmers have produced it sustainably for centuries. She agrees that there is a market for sustainable palm oil, but believes that the RSPO in its present form is not the way to supply it. She agrees with Greenpeace that a moratorium is the best way forward. In the meantime, she wants to see Cadbury and other companies include “palm oil” on their labelling, rather than hiding behind “vegetable fat.”

Is there a Plan B?

There’s no doubt that Daniel Ellis has a difficult job right now, coming into a PR role while Cadbury was the most trusted company in Aotearoa (in a Readers’ Digest poll) only to find himself having to bear the fallout when Cadbury throws their reputation out the window. But how much will this fallout affect the way Cadbury makes chocolate? If consumer opinion was a large reason why Cadbury changed recipe, will they change it back, or remove palm oil under consumer pressure? Ellis asserts that since the controversy began, Cadbury sales have actually risen as people go out to try the chocolate. Ellis would not be drawn on whether Cadbury might change their recipe, saying that they did not expect everyone would like it, but they believe they have made the right commercial and ethical decision. Curran says that this is not the mood she is feeling in Dunedin, mentioning that Whittaker’s chocolate was flying off the shelves when she last went to the supermarket, while Cadbury’s was sitting idle (I noticed the same phenomenon during a jaunt to Mosgiel New World last week). Whittaker’s themselves would seem to agree: Marketing Manager Philip Poole says that Whittaker's has been experiencing unusually high demand since Cadbury's recipe change. On the other hand, the expected protests at the Baldwin Street Jaffa Race turned out to be a flop, with only a dozen or so protesters peacefully holding signs and handing out pamphlets, while the race itself was very well attended. This isn’t surprising given that so many charities and school fundraising events depend on Cadbury to help them raise funds, and I wonder how many of them would risk biting the hand that feeds them.

Recently, David Bishop of the University of Otago Marketing Department said that Cadbury’s new recipe may have undermined a number of important product features that support their powerful brand. He believes this change to be as big a blunder as Coca Cola’s “New Coke” in the ‘80s. Whether it will turn out this badly remains to be seen, but it would be foolish for Cadbury not to have a back-up plan. While reverting to the old recipe may push up the price, with the money Cadbury has saved in rationalising its production process and reducing the size of the bars, it is hard to believe that costs would need to go too high. If softer chocolate really is so important to Cadbury, another option would be to switch to a different oil. After pressure from groups like Palm Oil Action, KFC has moved from frying their chicken in palm oil to a canola oil blend.

Trust us, we wouldn’t do anything evil, now, would we?

In the Otago Daily Times the day before the Jaffa Race, Cadbury published a full-page advertisement that stated that using a new recipe, and reducing the size of the bars, was a measure to protect consumers from price rises. Without mentioning palm oil, it also claimed that it had a history of ensuring ethical supply and that it made sure all its ingredients were sourced sustainably. The advertisement’s tone was patronising: it had an obvious “we know what’s best” attitude. What Cadbury has not done is explain clearly, from the outset, where their supply comes from and how they can prove it is sustainable. In fact, their story seems to keep changing. Judith Curran was assured that their supply comes from Malaysia, and not from Borneo – Curran had to inform Cadbury that a large part of Borneo was within Malaysian territory. Ellis could not tell me any specifics other than that their supply was a sustainable batch from South East Asia. When the Independent published a story on palm oil in early May, they said that Cadbury had informed them they were “looking into” finding a sustainable supply – this was after Cadbury had already moved to palm oil. No wonder Auckland Zoo hasn’t reneged on its ban just because Cadbury claimed they were trustworthy. Cadbury are trying to take steps in the right direction, but they need to be more open about their process, and if they know they can’t really find a sustainable palm oil, they need to look into an alternative. Mud sticks, and only consumer pressure will convince Cadbury that they can’t get away with greenwashing their chocolate bars.