Background
Ritter Sport is a German chocolate brand known for its distinctive square-shaped bars. Founded in 1912, it’s celebrated for using high-quality ingredients and its commitment to sustainability, including sourcing cocoa through Fairtrade and supporting environmental initiatives.
Understanding climate risk: a new imperative
Understanding climate risks in cocoa supply chains is crucial as these risks can severely impact both production and quality. Climate change poses direct threats to cocoa cultivation through:
- Temperature and rainfall changes: Cocoa trees require specific temperature ranges (18-32°C) and rainfall patterns (1500-2000mm annually) to thrive. Even small deviations can significantly reduce yields or damage entire harvests.
- Increased pest and disease pressure: Climate change creates favorable conditions for pests and diseases that affect cocoa trees, potentially devastating entire growing regions.
- Supply chain disruptions: Extreme weather events in key regions like West Africa have triggered major harvest failures. This contributed to a global cocoa supply deficit estimated at 478,000 tons for the 2023-24 season by the International Cocoa Organization (ICCO), pushing stock levels to multi-decade lows and causing market prices to surge dramatically (at points over 400% higher year-on-year), highlighting severe supply uncertainty and price volatility.
However, understanding and quantifying climate risks presents several challenges:
- Complex data requirements: Accurate climate risk assessment requires extensive historical climate data, current environmental conditions, and future climate projections - data that is often fragmented or unavailable for key growing regions.
- High costs of traditional assessment: Traditional methods of risk assessment, including on-ground surveys and manual data collection, are expensive and time-consuming, often costing companies hundreds of thousands of euros.
- Technical expertise gap: Many companies lack the specialized knowledge needed to interpret climate data and translate it into actionable business insights.
- Dynamic nature of risks: Climate risks are not static - they evolve and change over time, requiring continuous monitoring and assessment capabilities that many businesses don't have.
Scalable, affordable and accurate climate risk assessment
By leveraging advanced Earth observation technology and AI-powered analytics, The Landbanking Group delivers affordable, high-quality climate risk insights that enable consistent and cost-effective monitoring across locations, making it possible to scale assessment efforts while maintaining precision.
- Advanced Earth Observation and AI: Using satellite data and AI models to identify and quantify climate-related risks across Ritter Sport's sourcing locations.
- Data-driven analysis from multiple sources: Drawing insights from 111 climate models and 470 climate simulations and scenarios used by the IPCC, calibrated locally for maximum spatial detail.
- Detailed risk indicators: Assessment of key factors including:
- Precipitation patterns and extremes
- Air temperature evolution and extremes
- Drought and flood risks
- Bushfire risks
- High spatial resolution: Analysis of locations with different risk profiles per raw material at a 25km spatial resolution, which allows for precise analysiss, enabling targeted assessment of climate risks across different sourcing locations.
Data-driven insights help Ritter Sport protect their cocoa supply chain from climate risks
Ritter Sport gained precise data that helped them build strategies to address climate risks in their critical supply chain:
- Location-specific climate risk analysis: The Landbanking Group assessed climate-related risks at sourcing locations of Ritter Sport’s key ingredients, focusing on temperature fluctuations, precipitation trends, and extreme weather events. Customized reports for each sourcing region provided insights into future croping conditions and general climate risks.
- Identifying and prioritizing high-risk regions: The climate risk analysis pinpointed the most vulnerable sourcing areas and provided location-specific insights, enabling Ritter Sport to focus mitigation efforts and strategically support farmers in adopting climate-resilient practices.
- Enabling informed long-term planning: With access to historical and projected climate data, Ritter Sport can make proactive, data-driven decisions to build a more resilient supply chain.
