How will you deal with huge price increases in chocolate? Or maybe a shortage of chocolate?
The global chocolate industry is facing a crisis. Demand for chocolate is vastly outweighing the available cocoa supply, leading to skyrocketing cocoa prices that will make chocolate treats more expensive in supermarkets around the world.
On Friday (15 March 2024), benchmark cocoa futures hit a record high of $8,018 per metric ton, 215% higher than last year.
The price spike has caused large African cocoa processors—which take raw cocoa and turn it into something usable for chocolate companies—to slash production, since they can no longer afford to buy beans.
Cocoa trees only flourish in a narrow band around the equator, which is why four West African countries (Ivory Coast, Ghana, Cameroon, and Nigeria) produce almost 75% of the globe’s cocoa supply. Due to bad weather, bean disease, and a lack of investment in new trees stretching back decades, recent cocoa harvests have been dreadful. The cocoa market will be short 374,000 tons this season, up from a shortfall of 74,000 tons last season, according to the International Cocoa Organization.
In addition to a smaller supply, global demand has doubled in the last three decades, making the situation even worse. (Remember Supply and Demand from high school economics class?)
Prices for chocolate products at US retail stores grew 11.6% in 2023 compared to the previous year. Confection companies Hershey and Cadbury-maker Mondelez warned they’ll have no choice but to pass on higher cocoa costs to consumers.
[Courtesy Morning Brew]
