Obroni and the Chocolate Factory

by Steven Wallace

  But for decades, despite all this focus on growing cocoa in Ghana, there was almost no recognition of moving up the cocoa value chain and making confectionery from the nation’s cocoa bean supply. Here was the paradox: Ghana, one of the two largest cocoa-growing countries in the world, produced no finished chocolate.

  To be precise, when I started my company in 1991, Ghana produced almost no finished chocolate. The chocolate that had been attempted in Ghana was roundly acknowledged as some of the world’s worst and had failed to sustain exports to any high-end consumer market. It was rumored to contain paraffin to keep it from melting in the Ghanaian heat. A pound of high-quality chocolate sells at a price many times that of a pound of raw cocoa beans, yet over the course of many decades, instead of producing quality chocolate, Ghana was content to sell its raw cocoa beans to processors and chocolatiers in Switzerland, Belgium, France, the Netherlands, and the United States.

  Switzerland makes fine chocolate, of course, but how many cocoa trees grow in Zurich? In the vocabulary of the eighteenth-century economist David Ricardo, what competitive advantage does Switzerland enjoy, that Ghana could not more credibly assert? Comparative advantage in the realm of international trade is simply an admonition to do what you do best, and trade for the rest. It is a plea for companies and countries to identify those attributes that make them unique—and by “unique” Ricardo meant truly one-of-a-kind, if possible—and exploit those attributes in the marketplace. From an economist’s point of view, there is no compelling economic reason, no underlying competitive advantage, why Hershey, Pennsylvania, is home to a large chocolate company. It is located very far from any cocoa farms, and it is an ocean away from the companies that historically have manufactured the machinery that converts raw cocoa into chocolate.

  Consequently, my business began with a simple question: Why shouldn’t Ghana make its own chocolate? I believed that Ghana should reap a bigger share of the downstream profits derived from its much-admired commodity. Though Ghana seemed content to sell beans for pennies a pound instead of making chocolate that sells for several dollars a pound, I believed strongly that Ghana could and should move up the cocoa value chain.

  Ghana could truly make a fresher, more compelling chocolate by seizing its climatological and topographical advantage for growing cocoa. The country starts with an enviable, unassailable raw-material advantage over its Alpine competitors, whose climate is singularly inhospitable to the cultivation of cocoa trees. But an ascent of the cocoa value chain would require that Ghana procure both specialized production knowledge and machinery, both of which, happily enough, are available (at a price) and portable: you can hire experienced chocolatiers and fly them to Ghana, and you can likewise import German-built conches and roller mills. If you assemble all these components in Ghana, you could make chocolate with a unique value proposition—freshness—that should be competitive in the global market. And, according to economists, once you’ve achieved this result, then you ought to forgo other less-remunerative agricultural or manufacturing efforts and press your competitive advantage hard.

  Thus the notion of comparative advantage in international trade, if taken literally, is both intellectually provocative and almost certainly politically untenable. Does it truly make sense to bet the farm on a single industry, no matter how lucrative? What about allocation of risk? Shouldn’t a national economy bet on several industries, rather than just one? But to ignore the lesson of uniqueness in comparative advantage is to miss the opportunity to create long-term prosperity.

  I raised this issue at a meeting of the World Economic Forum on Africa, in 2011. The panelists were discussing the importance of food security in each country—a topic that held an undeniably populist appeal. Who could possibly be against food security?

  To achieve food security, some countries subsidized the growing of certain food crops that were not the sort of crops that could be easily or efficiently grown in their countries. The crops might require extensive irrigation, which upset best-practice land use, or they compelled a diversion of natural watersheds, causing other ancillary harms. Almost certainly, pursuit of such policy required a heavy government subsidy, one that would eventually prove economically unsustainable over time. So far as I could tell, “food security” seemed to be defined by most countries as “growing as much of your food domestically as you can, regardless of the cost or subsidy required.” Such thinking struck me as a rebuke to the notion of global trade and its many benefits. At the question period, I made my way to the microphone.

  “What if,” I asked, “an African country made such wondrous chocolate that it captured significant foreign exchange revenues? Imagine that this country’s chocolate sold abroad with great success, leading to a surplus account denominated in hard currencies—a surplus so formidable that the country could now afford to import rice and other foodstuffs instead of trying to grow them domestically? Isn’t that a better, more economically sustainable result than trying to promote food security via artificial price supports?”

  I’m transfixed by the idea of comparative advantage in all its implications. Switzerland, Germany, and Italy have excelled in cocoa-processing technology. They bend and polish stainless steel into the marvelous roller mills and ribbon blenders that coax cocoa beans into finished chocolate. They fabricate the jacketed kettles known as conches that gently warm the chalky cocoa mass over the course of many hours—days even—into luxurious molten chocolate. These Alpine countries are home to the companies that make the machines that make the chocolate. And hence, these countries also became adept at making chocolate itself. But these processing machines, once built, could be transported anywhere on the globe. Rarely, however, had they been purchased by companies willing to make chocolate in those tropical countries where cocoa is physically grown—where, I believe, the comparative (and thereby competitive) advantage resides. And when cocoa-processing machinery is placed in an origin country, the investors rarely try to craft finished chocolate designed for export markets. Why not, I wondered?

  Somehow globalism as practiced during Africa’s colonial scramble had devalued the natural advantages that should have been enjoyed by many African countries, rendering these countries mere repositories of raw materials awaiting exploitation by processors located throughout the globe. Africa had become the pantry for the world, a place where more enterprising nations abroad could stock their shelves with bauxite, gold, uranium, petroleum, rubber, diamonds, sugar, and cocoa.

  “Globalism” shouldn’t be a dirty word, I thought. Globalism once held promise. The algorithm was straightforward. Geographic competitive advantage (derived from the global scarcity of certain natural resources), when combined with education and technology, should hold some hope for creating enduring national wealth.

  So I began my chocolate journey by thinking about globalization. Omanhene, though laughably smaller than many of our competitors, nonetheless competes in a global economy, and we have fashioned our company, very deliberately, to address head-on some of the most vexing issues surrounding globalization.

  We recognize that the world is undergoing rapid globalization, but is globalization a good thing or bad? Just a generation or three ago, there was widespread agreement that nationalism, militarism, and expansionism led to the atrocities of World War II. To countries large and small, rich and poor, globalization appeared to be an antidote—perhaps the only antidote—to the abyss of war.

  The Marshall Plan can be viewed as an unprecedented globalization effort to rebuild a broken and bankrupt Europe using US government funds, in the belief that economic prosperity and economic interdependence were the best ways to assure that war would be the choice of last resort when it came to solving international disputes. Think of the Marshall Plan as a global stimulus package, as deficit spending writ large for purposes of global economic recovery. Charged words perhaps in today’s incendiary political environment, but in retrospect the Marshall Plan was worth every penny.

  Today, however, globaliza
tion is shorthand for economic exploitation—a sort of “take it or leave it” economic determinism wherein a small country must accede to the demands of a large, multinational corporation. Why? Because that multinational might well have more economic value than the entire GDP of that small country, and consequently the small country acquiesces to the demands of the multinational, or else it won’t have any foreign direct investment whatsoever. Walmart, after all, had gross revenues of some $486 billion in 2015, making it a far larger economic enterprise than the entire nation of Ghana, with its GDP of just about $32 billion in 2015. By this measure, Walmart is an economic engine over ten times the size of Ghana. Widespread frustration with the perceived exploitative influence of multinationals culminated in 1999, when massive public protests disrupted the World Trade Organization meeting in Seattle.

  We had come full circle in the span of just fifty-four years, from 1945 to 1999. The word “globalization” changed meaning entirely—it changed from a positive force that underpinned the Marshall Plan to a menacing one that threatened jobs.

  It is in this historical context that Omanhene was founded, as a multinational company that aspires to serve as a force of global good. All this goes for naught, however, if you don’t produce a fairly-priced, delicious chocolate bar or a tin of hot cocoa drink mix that people will buy more than once. For me, economic viability over time is the very definition of sustainability.

  So, I’d like to revisit my old friend David Ricardo and discern just what competitive advantage—other than exoticism and novelty—I might assert in the highly competitive global chocolate marketplace.

  Crafting chocolate in a cocoa-growing country of origin provides a freshness advantage that legacy chocolate companies abroad simply cannot replicate. These European and American producers have to acquire raw cocoa beans, fumigate them, stuff them into the dark hold of a steamship, and subject the beans to a monthlong ocean voyage before processing them into chocolate. Our comparative advantage rests on freshness and authenticity.

  The story of Omanhene is still very much a work in progress. I am not ashamed of this. I am not especially proud of it, either. It took more years than I care to admit before I stopped the incessant, daily worrying that nagged at me like a microeconomic harpy taunting me from my shoulder: “You will run out of money in two weeks! MacFinn will bury you! M&M Mars will copy everything you’ve done, and they’ll do it better, faster, and cheaper! You think you can transform a nation’s economy, do you? Such hubris!”

  It took so many years to achieve positive cash flow that any venture capitalist would have bailed on the Omanhene project, executing their remorseless five- or seven-year “exit strategy,” to use their sanitized nomenclature for quitting. So this is not going to be a book about the founding of the company per se. That book implies a sense of temporal certitude—a beginning, a middle, and an end—that does not seem truthful to the journey I’ve undertaken. That book would require me to rewrite history, and I won’t do that. So this story covers the early years of what would become The Omanhene Cocoa Bean Company. It was a tumultuous, exasperating, and exhilarating period. It almost cost me my home, my wife (how perilously close it came to unraveling my marriage, I may never know), my sense of humor, my credibility (whatever that was worth), and, to quote Mr. Thomas Jefferson, my sacred honor. It was a helluva time. I wouldn’t trade it for the world.

  I didn’t get into the chocolate business because I grew up eating a lot of chocolate. Nor did I start the company because I needed a capstone project for an MBA—indeed, I never went to business school. I went to law school, and for two years I practiced tax law in Washington, DC. I was miserable. But I soon left the firm, returned to my hometown of Milwaukee, and began working in the family wholesale T-shirt business, a low-margin enterprise in a brutally competitive market. Sensing that the company would soon face blistering competition from larger out-of-state competitors as a wave of consolidation racked the industry, I suggested we sell the business. I effectively told my father to put me out of a job. He took me up on my offer. I was twenty-nine years old.

  And so, with time on my hands, I kept returning—the way you pull a favorite book off the shelf again and again—to memories of a remarkable summer, in a faraway country I hadn’t seen in fourteen years.

  ho ani akεseakε, nanso enhunu man mu asεm.

  The big eyes of a stranger nevertheless do not permit them to see everything in their new abode.

  “The perception of the foreigner is never perfect.”

  CHAPTER 2

  The Summer of 1978

  The desert, some thirty-eight thousand feet below, seemed a casual, khaki joke. From this height, the Sahara was an expanse of undifferentiated sand dunes and hillocks, rock and wadi, as far as I could see. Holed up in the cabin of the jumbo jet, I felt the rise of claustrophobia—my personal shame. My heart raced, my stomach a cauldron of microwaved fondue and V8 juice. I popped up from my seat and scanned the fuselage looking for the emergency exit. Not that I’d actually do anything, but it helped to know I could.

  My panic dissipated. Hours later, the jet heaved forward like a breaching whale, and we descended into Accra. As the plane gently rolled sideways, lining up its approach, I saw sections of the city spread out beneath us—streetlights, modest-sized buildings, and the headlamps of cars—points of light as random as raindrops. For so many hours, the high altitude exerted its aerodynamic sleight of hand; we seemed to hang motionless in the sky. Relative speed (or lack of it) masked the forward motion of the plane. Now, the wing lurched up and down, the displaced clouds confessing our speed as the plane accelerated earthward. Gilbert and Sullivan’s HMS Pinafore played on channel three. I couldn’t help but hum along as I pictured the cast raising their arms in Britannic triumphalism: “He remains an Englishman! He remains an-Eh-eh-eh-eh-eh-eh-eh-eh-Englishman!”

  The airport in Accra bore a passing resemblance to news clips I’d seen of Entebbe, my only frame of reference for African airports. The wan lighting, the low-set cement structures, paint worn thin by the equatorial heat, rusting fifty-five-gallon oil drums stacked near a terminal building set with jalousie windows, their glass louvers caked with dust. KOTOKA INTERNATIONAL AIRPORT was rendered along an exterior wall in large plastic letters, in a font so pedestrian that you couldn’t help but wonder if anyone considered the value of using a more modern typeface simply to create an image of progress.

  We nosed up to an Aeroflot jet, a tri-engine Tupolev, the Bolshevik Boeing. Détente on the tarmac. The door opened, and the oppressive heat hit me, even though the hour was late and the sun had set long ago. I’d never been to Ghana before, never felt anything like this anywhere. My response was astonishment, combined with a frisson of fear. How will I breathe? Can I bear this heat?

  I paused at the top of the staircase and removed my powder-blue Camp Chippewa windbreaker, tying it about my waist, pulling the sleeves tight so the jacket wouldn’t slip down. A Ghanaian woman with a clipboard reached for my crotch and violently tried to undo the knot, pulling off my jacket. “Ei, silly boy! What are you doing? Take that off.”

  I pulled back, shocked. Was she a thief? Why was she so angry? Why did a thief have a clipboard? A flashbulb popped. A journalist took my picture and asked for my name. What had I done?

  Welcome to Ghana.

  I made my way down the gangway, confused. Even the aircraft struggled to breathe in this heat, its engines sucking the tropical air, turbines spinning slowly down. The jet’s chilled aluminum skin, frozen after six and a half hours at high altitude, drew moisture from the humid air and deposited it in small puddles around the fuselage. Every engine nacelle, fuselage rivet, wheel hub, and pitot tube was bejeweled in tiny droplets of water.

  So this is what summer is like in equatorial Africa. Before leaving home, I’d done enough research to know that the climate in Ghana was different: low temperatures in Ghana were, on average, in the mid-70s—pretty much the summertime average high in Milwaukee. And I knew better than to
expect jungle landscapes, like real-life Rousseau paintings, especially not in the city of Accra. But the riot of vegetation astonished me; greenery flourished, cascading over every wall, the scent of it perfumed the warm air around me. In the darkness, I could see the harsh fluorescent lights of Accra punctuating the cubist silhouettes of compact, leaden buildings that seemed to crouch close to the ground, even the ones that were several stories high. Milwaukee, with its proud Midwestern tradition of first-rate architecture preserved in many parts of town, seemed a far taller city. Yet there was a muscular energy here in Accra, one I couldn’t define, and only part of it emanated from me. The whole airport seemed to vibrate and bustle, accompanied by loud voices in languages I didn’t understand. It was thrilling—and I could tell I’d have trouble getting to sleep that night.

  * * *

  It was fitting that we landed on a Sunday. In Ghana, most people have a nickname that corresponds to the day of the week on which they were born, a tradition that three of the largest ethnic groups in Ghana—the Fanti, the Twi (Akan), and the Ewe—all follow:

  Male Day Name

  Day of Birth

  Female Day Name

  Kojo

  Monday

  Adwoa

  Kwabena

  Tuesday

  Abena

  Kwaku

  Wednesday

  Akua

  Yaw

  Thursday

  Yaa

  Kofi

  Friday

  Afua

  Kwame

  Saturday

  Ama

  Kwesi

  Sunday

  Akosua

  Ghanaian “day names” lead to some confusion. Unlike a Russian novel, where a single character might have half a dozen different names (Pyotr, Pierre, Petroushka, the Count, Count Bezukhov, etc.), in Ghana, half a dozen people in your social circle might share the exact same name (Kofi, Ama, Kwame, Abena, Kojo, etc.). It’s the difference between the illusion of a large population and the illusion of consanguinity—as if Russia needed to populate its vast geographic footprint artificially and Ghana preferred to keep things in the family.