Chocolate Products Could Soon See A Price Hike With Cocoa Costs Rising
Inflation may be slowing or even lowering in other categories as "Eggflation" halts and prices of raw sugar and coffee beans are falling. But, now, it looks like cocoa is on the chopping block. Your in-case-of-emergency-break-glass chocolate bar is facing an emergency of its own. On June 30, cocoa reached its highest price in 46 years on the Intercontinental Exchange in London. Prices are up a whopping 40% from October 2022, reaching 2,590 British pounds per metric ton, the steepest tag since 1977.
Like last year's wheat, fuel, and cooking oil price surges, this latest cocoa boom is (surprise) linked to Russia's invasion of Ukraine. When it all started back in February 2022, European manufacturers were warned that, without Russian fuel imports, they wouldn't be able to have enough energy to function. Expecting the worst, European chocolatiers began placing fewer and fewer orders for cocoa imports. But now, over a year later, the playing field is bad again in a different way. "Everyone suddenly realized that the economy would be fine and that they didn't have enough cocoa beans," Shawn Hackett, president of Hackett Financial Advisors, tells Time.
The International Cocoa Organization (ICCO) previously anticipated the deficit to be somewhere around 60,000 metric tons — a figure it has since increased by roughly 236% to 142,000 metric tons. To make matters worse, commercial cocoa cultivation also requires large amounts of fertilizer, another product subjected to a global shortage due to the Russia-Ukraine crisis.
The public's sweet tooth faces unsavory news
Three-fourths of the world's cocoa supply comes from the Ivory Coast, Ghana, Nigeria, and Cameroon, all of which are located in West Africa. In recent years, the area has been hit hard by drought and hurricanes, fluctuating between not enough and too-much rainfall and the continuing havoc of El Niño. The Ivory Coast alone is responsible for 50% of the cocoa supply, and its exports are down roughly 5% by volume this season. West African cocoa plants have also been afflicted by a sweep of swollen shoot disease, a virus that spreads through the entire tree.
As raw material dwindles and demand rapidly outpaces supply, the market is getting progressively tighter. Cocoa farmers have already been struggling in the inflation-high marketplace. For some folks, this new price hike is actually good news. "We are very happy that cocoa prices are rising," said Pascal Baltussen, chief of impact and operations at Tony's Chocolonely, an Amsterdam-based chocolate brand that emphasizes fair labor practices, via CNN. "Cocoa prices have been way too low for West African cocoa farmers to earn a living income." Tony's increased its U.S. retail prices by 8% earlier this year.
For foodies, it might get worse before it gets better. "I don't think the consumer has seen the full extent of the impact yet," Paul Joules, a commodity analyst for Rabobank, told the outlet in late June. Hershey CFO Steven Voskuil also predicts chocolate prices to rise in 2023 and 2024.