Have you noticed pricing increases on your favorite chocolates? Or the size of your bars is smaller than you remember.
The demand for chocolate far exceeds the available cocoa supply, resulting in a significant surge in cocoa prices. This surge is poised to impact chocolate lovers worldwide, as supermarkets’ cost of their favorite treats is set to rise.
Cocoa Prices Reach Record Highs
The upward trajectory of cocoa prices is steep and not currently showing a sign of slowing down.
Recently, benchmark cocoa futures hit an all-time high of $8,093 per metric ton on March 15, 2024, marking a 25% increase within a week and a staggering 215% surge compared to the previous year.
As of the morning of March 18, 2024, it is still continuing an upward trend with a price of $8,278.
African Cocoa Processors Struggle
The unprecedented price spike has forced major African cocoa processors to curtail production due to the inability to afford raw cocoa beans. These processors are crucial in transforming raw cocoa into usable forms for chocolate companies.
Factors Driving High Cocoa Prices
Cocoa trees thrive in a limited equatorial band, with four West African nations – Ivory Coast, Ghana, Cameroon, and Nigeria – contributing nearly 75% of the world’s cocoa supply. Ivory Coast alone accounts for almost half of global cocoa production.
However, over several decades, adverse weather conditions, diseases affecting cocoa beans, and insufficient investments in new tree cultivation have led to dismal cocoa harvests.
These issues have widened the gap between cocoa supply and demand significantly.
The cocoa market faces a shortfall of 374,000 to 500,000 tons this season. This shortfall is a stark increase from the 74,000-ton deficit observed last season, as the International Cocoa Organization reported. This puts the supply at the most significant deficit in at least 65 years or possibly ever.
A climate crisis in the Ivory Coast and Ghana is making your chocolate more expensive@MumbiGitau explains what's pushing up cocoa prices https://t.co/HwjNR6kNAI pic.twitter.com/B9UZ7ysoCO
— Bloomberg Africa (@BloombergAfrica) December 1, 2023
Rising Chocolate Prices
The repercussions of these challenges are already evident in the market. According to Circana, in 2023, prices for chocolate products in US retail stores surged by 11.6% compared to the previous year..
Looking ahead, major confectionery companies like Hershey and Mondelez (maker of Cadbury) have indicated their intent to pass on the escalating cocoa costs to consumers. This price increase could include “shrinkflation,” new products using less chocolate, or raising prices.
In conclusion, the global chocolate industry is navigating turbulent waters as it grapples with soaring cocoa prices and supply-demand imbalances.
Chocolate enthusiasts may need to brace themselves for higher prices as industry players adjust to these challenging market conditions.
