Sweet and Sour? Anthony Ward shakes up the Cocoa Bean Market

August 2, 2010



Written and Analysed by Susan Moger

When asked the greatest challenge a politician can face, Harold Macmillan replied “Events, dear boy, events”. This is a comment with which senior leadership teams in the confectionery sector in Europe will no doubt identify, on learning the recent news of a raid on the world’s supply of cocoa beans.

It is unlikely that they would have anticipated the effects of the activities of Anthony Ward, a commodity trader specialising in cocoa, whose hedge fund Amajaro has bought £650m ($992m) worth of cocoa beans, 7% of the world’s supply [July 16th, 2010].

According to The Telegraph: Anthony Ward, 50, bought 241,000 tons of cocoa beans and now owns enough to manufacture 5.3 billion quarter-pound chocolate bars. Mr Ward, who is worth around £36 million, holds so much of the market he could force manufacturers to raise the price of Britain’s favourite chocolate bars. The former Chairman of the European Cocoa Association has amassed up to 15 per cent of the word’s cocoa stocks in the last ten years. The cocoa beans from his latest trade are expected to be kept in warehouses in The Netherlands, Hamburg, London, Liverpool or Humberside and are the equivalent of the entire supply of the commodity in Europe.

Ward’s acquisition may have the effect of increasing cocoa prices substantially. The next African cocoa harvest is not due until later September and October this year, and many firms are looking to source supplies for the manufacturing run leading up to the lucrative Christmas and New Year markets.

With a West European Confectionery market worth Euros 44.6 billion in 2008, and a very complex relationship with retailers in terms of products already developed and pre-sold, leadership teams face a tricky balance between delivery of products and the protection of their margins during one of the key demand and profitability-raising periods of the year.

One industrialist who is a former advisor to the UK government on restrictive practices did not feel the issue should focus on what Ward had done, commenting “I think it is too easy to blame an individual for taking advantage of a market opportunity. If he didn’t, wouldn’t someone else have done so? It’s necessary to look at the whole system, and what could and should be done about it.”

Ward’s activities have led some to dub him ‘Chocfinger’ (Financial Times, July 24th p.11) and they have invested the possibly rather prosaic world of confectionery manufacture with a new drama and intrigue. His activities certainly show all those involved in any leadership activity in any sector that external events can have an impact which isn’t anticipated and which can’t necessarily be ameliorated. Taleb called such events Black Swans in his book of the same name.

It remains to be seen whether the confectionery manufacturers’ dealings in sweet commodities will turn sour this Christmas.

Students of Leadership

What lessons might be learned from this story? What can be learned from earlier attempts to corner a market? Are there governance and ethical considerations to be taken into account? What does the story tell us about entrepreneurship?

Image

Courtesy of the Amajaro Board. Image downlaoded from the corporate website [Anthony Ward is 2nd from the right].


Querrey on the up, Murray’s career is at the crossroads

August 2, 2010

Andy Murray’s career at a tennis player is at the crossroads. Something was broke and needed fixing. He has decided to change his coaching team in a quest to advance further in the game

Andy Murray’s tennis career seems to be on hold. His goals of a winning grand slams, and maybe contesting for World No 1 seem increasingly remote. The trajectory was highlighted last week as he announced a change in training personnel. He also lost to big-hitter Sam Querrey [August 1st 2010] whose career seems on a more upward track.

The counter-puncher out-punched

The loss was in the final of the Farmer’s Classic, in Los Angeles, a relatively minor ATP event. Murray had accepted a wild-card and had been granted top-seed status. It could be argued that Murray did well to get to the final, where he demonstrated only fitfully his strengths of speed and shot brilliance, and more clearly the weaknesses that are now increasingly recognised. These are much to do with finding a shift away from counter-punching when facing a skillful big-hitter capable of out-punching the counter-puncher. Murray’s serve remains disappointingly unreliable.

Managing change

It is no exaggeration to suggest that Murray needs a radical change to reach his tennis goals. Changng his coaching set-up might be as necessary as was BP’s change of leadership recently, as much signal of intent as guarantee of future success.

Resilience and other success factors

In work on dream-teams, there is evidence that performance success may be shown through team factors such as resilience, learning from experience, vision, and capacity to activate a network of contacts. Murray has shown willingness to initiate changes to achieve his professional goals. His last coaching change was to remove the abrasive but internationally-experienced Brad Gilbert with a team-set up providing a cosier psychological environment led by Miles Maclagan. Strictly speaking, a positive team-climate is another success-factor, but positive is not the same as unchallenging. This time he may have acted realising that comfort-zones are there to be broken out of.