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GLOBAL COCOA MARKET

As a result of a worldwide growing demand for cocoa products and a constrained supply – there is an anticipated deficit in cocoa production over the next 5 to 10 years.

Global demand for chocolate and cocoa based products is rising due to higher incomes, urbanization, a growing middle class and an increase in consumption in emerging markets.

Chocolate sales in China are forecasted to be the country’s fastest-growing confectionary sector through at least 2016. Meanwhile, Brazil, the 6th largest producer of cocoa beans, can’t keep up with its own demand.

Between 2003 and 2011, India and Brazil’s cocoa consumption more than doubled, and China’s consumption more than tripled. This increase is expected to continue into the future. It is estimated that by 2020, chocolate demand will outstrip production by over 1 million tons.

At the same time, the cocoa industry is facing challenges in meeting the growing demands of the markets due to weak production growth.
Almost 90% of the global cocoa supply comes from approximately 5 million smallholder households primarily from the tropical climates of Western Africa, Latin America and Asia. Each of these smallholders solely produce an average of 0.5MT per Ha.

These farmers face ageing orchards which, as they get older, decline in productivity and are more exposed to diseases. Smallholder farmers often lack the knowledge and resources to employ best agricultural practices, and use modern fertilizers and pesticides. Farmers are further hindered by limited access to markets. In addition, the average daily income per capita for cocoa farmers in West Africa is less than 2$ per day, which leads the young generation to move to urban areas while the remaining farmers are switching to more profitable crops like palm oil and rubber.

The growing demand and constrained supply of cocoa presents an attractive investment opportunity. The need for a stable supply of cocoa - with guaranteed quality - provides a window for a knowledgeable, proven agribusiness team to enter the early phases of the supply chain. At capacity, cocoa farming and processing can produce some of the highest returns-on-investment in the agriculture industry.

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Productivity

In the highest-producing countries, cocoa productivity is hurt by inefficiency, disease, ageing trees, and lack of best practices. There is an acute need for innovative agronomic methods and technologies to secure high-yield and premium quality. Bean & Co will develop modern intensive plantations in order to improve yield, quality, and overall efficiency.

These technologies and practices will allow our modern plantations to achieve outstanding yield performance and consistent production over time. The projected increase will be 5 to 8 times more than the local average production capacity.

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Execution

The company has developed a global deal flow of projects, encompassing a diverse portfolio of investment opportunities. In each project location, the company has a strong presence and familiarity with the political forces, local culture, and regulatory environment.

Our portfolio is expected to comprise approximately 40,000 hectares of cocoa plantations in different locations worldwide, including 6,000 hectares of existing plantations, and 34,000 hectares of greenfield plantations. This geographic diversification serves to hedge risk, while the diversification between existing and new plantations generates immediate cash flows as newly-planted trees reach maturity.

Bean & Co leverages its expertise to select the most attractive and profitable cocoa projects available in its pipeline. The company examines and conducts a detailed due diligence process for each potential investment, in order to ensure that projects generate viable cash flows and attractive returns.

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Bean & Co Competitive Advantages

Experienced staff:
Bean & Co’s team of experts have more than three decades of global agriculture development and management experience. The team’s experience includes hundreds of millions of dollars’ worth of successfully realized projects, strong networks and relationships on the ground, and industry-leading expertise in tropical agronomy.

Deal Flow:
Bean & Co has developed a global deal flow of projects, resulting in the ability to “cherry-pick” the most attractive and profitable cocoa projects and create a diverse portfolio of investment opportunities.

Local Presence:
In each project location, Bean & Co has a strong presence and familiarity with the political forces, local culture, and regulatory environment.

Agro Technology and Methods:
To secure high-yield and premium quality, Bean & Co adopts innovative agronomic methods and technologies including: an increase in trees per hectare, mechanized cultivation, advanced growing methods, introduction of irrigation, fertilization, and improved varieties, and phyto-sanitary protection. These technologies and practices will allow our modern plantations to achieve outstanding yield performance and consistent production of 5 to 8 times more than the global average production capacity.

Direct Sales:
With a combination of high quality yields and economics of scale, Bean & Co will be able to bypass the traders and secure off take agreements with the major industry players.

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