Grand-Place Vietnam: an example of vertical integration

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The first « Single Origin Made in Vietnam » chocolate

Grand-Place Vietnam (GPV), a company funded by BIO, is about to market the first chocolate made entirely in Vietnam, from the cultivation of the cocoa to the final product. GPV is to date the first producer in this country to integrate the cocoa sector with its production. The use of cocoa cultivated locally will replace the importation of raw materials required for the chocolate-making process. It will also enable GPV to bring down its ecological footprint and to maintain full control of quality at all the production stages.

Operating in Vietnam since 1994, Grand-Place is a manufacturer of Belgian chocolate specialised in chocolate covering and chocolate decorations. In 2007 GPV received a loan of 650,000 Euro from BIO to finance the construction of a new factory, to purchase a second chocolate covering production line used exclusively for chocolate made with cocoa butter and lastly, to broaden the range of chocolate decorations, high-end products bringing much added value especially for exportation. Opened in 2009, the factory produces 3000 tons of chocolate per year for sale to hotels and restaurants, bakeries, confectioners and ice-cream manufacturers. In addition, GPV exports part of its production to North America and Asia.

Revival of the cocoa sector

Although cocoa has been cultivated in Vietnam since 1954, it never really took off because of the absence of market prospects. Recovery came about following an ambitious programme set up in 2004 by the Vietnamese government to relaunch the sector in response to a shortage in world production. Cocoa cultivation in Vietnam is still in its infancy as it takes 4 years for a cocoa tree to produce beans. Besides, cocoa beans as raw material are difficult to work with and they require a particular skill.

As a matter of fact, they cannot be used by the chocolate industry immediately after harvesting. They must then follow a particularly long and strict process. Usually it is the producers or small cooperatives who take charge of this post-harvest work. Each stage influences the final quality of the product.

A technical assistance grant allocated by BIO to GPV has allowed it to study the quality of the beans and to train its technical team for management of the cocoa sector. The results of this study have given rise to the establishment of a programme aimed at improving the quality of the beans.

The team of experts collaborate with the local farmers at all stages of production, from harvesting to drying and fermentation. This collaboration allows the producers to acquire new skills and to learn modern techniques, thus contributing to the viability of the sector.

Positive effects on the producing country

By launching a “Made in Vietnam” chocolate, GPV creates extra added value by developing local skills by means of a transfer of Belgian knowledge and technology in the production process.

The project has a positive double impact on the country’s economy. On the one hand, by entering the cocoa sector, GPV is going to reduce its imports of raw materials needed for the production process and on the other, the export of part of its chocolate production will contribute to generating hard currencies. The project will also lead to the creation of new jobs. Finally, the vertical integration of the sector will foster and develop the growing of cocoa and improve techniques and yield. The support given to this sector might serve as an incentive for producers to resume farming of other subsistence crops.

The success of this project shows the importance of access to finance for private companies in developing countries. By helping companies to invest in the expansion and consolidation of their activities by long-term financing and by supplying them with grants for technical assistance, BIO is contributing to the stimulation of innovation and the development of new skills. Supporting the private sector contributes to the strengthening of the local economic fabric, the diversification of markets and the promotion of entrepreneurship. The agri-food sector, that is to say the growing of subsistence crops, export crops, livestock farming and the processing industry, is a priority for BIO because it generates a direct impact on the local economy and the living conditions of the population.