In bad news for chocolate lovers, confectionery makers are increasing prices as cocoa beans trade at near decade highs with no respite on the horizon.
Food companies have been grappling with rising costs for the main chocolate ingredient, with cocoa prices up more than 25% in a year amid widespread flooding in some of the world’s main growing regions.
Analysts at Rabobank noted that sugar, another major ingredient in chocolate, was also priced at historically high levels.
“Some of our favourite types of chocolate in Australia have risen in price by around 10 to 20%, so we’ve seen inflation in the category and that could continue if these cost pressures are going to increase,” associate analyst Pia Piggott said.
She said global cocoa prices had been on an upward trajectory since September last year, as the world heads into a potential third year of a cocoa supply deficit.
“The major production regions, particularly in Ivory Coast, which accounts for more than 40% of global cocoa production, have had very wet conditions and flooding, which has been causing rotting and disease in the trees,” Piggott said.
Most wholesale food prices have fallen over the past 12 months, prompting calls for those reductions to be reflected on the shelves of supermarkets, which have increased their profit margins during the recent period of high inflation.
Global prices for meat, dairy, vegetable oils and most cereals are down significantly, according to the United Nations’ food price index.
But weather and geopolitical events are playing havoc with specific produce.
Wheat prices spiked last week after the Kremlin pulled out of the Black Sea grain deal to allow agricultural exports. Russia then targeted grain stores and ports with missile strikes, sending wheat prices higher.
The price increases are causing concern as many people reel from rising living costs, conflict and drought, especially in the Horn of Africa.
The global chocolate trade is estimated to be worth more than US$1tn, and has been linked to widespread deforestation in Ivory Coast and Ghana, on the western side of the continent.
Cocoa, produced from the seed of the tropical cacao tree, is native to South America, but most is now produced in Africa.
Rabobank’s senior dairy and food retail analyst Michael Harvey said consumers would probably decrease their chocolate intake in response to price increases.
“Because there is belt tightening going on and there’s going to be reduced spending on discretionary products, that might mean a little less chocolate on the go and less impulse purchasing out and about,” Harvey said.
“However consumers will still likely want to have some indulgence and eat chocolate when they are at home.”
