Fairtrade brand Divine Chocolate dipped into the red last year after losing a major own-label contract with The Co-operative Group.
The supplier, owned by Ghanaian cocoa farmers' co-operative Kuapa Kokoo, also blamed commodity costs, exchange rates and a product recall for the £227,104 pre-tax loss for the year to 30 September 2010, against a £189,610 profit the year before. Sales slipped 11.5% to £10.4m.
In its annual report, Divine said that although it had won the contract to supply the Co-op Group's premium range, it had lost the contract to supply its standard range. The Co-op's cocoa supply base is now split between Divine and ICAM, another Fairtrade supplier.
Divine admitted the VAT increase and an increase in the rsp of Divine in the supermarkets had hit demand. Retailers had also been slow to restock Divine Dark, which was voluntarily withdrawn in January 2010 because of a labelling issue at a cost of £168,513 and a month before Fairtrade Fortnight, a crucial trading period for the company.
Despite the setbacks, Divine said exports had jumped 23% during the year and that it had a strong NPD pipeline. Its US business also continued to "grow rapidly".
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