'Cocoa crisis' to push chocolate prices even higher

A “cocoa crisis” is likely to push chocolate prices higher around the world, a new report by Rabobank has found.

The food and agribusiness banking specialist found that “significantly higher” chocolate prices would hit shelves over coming months and into 2025.

Cocoa commodity prices have hit their highest levels in nearly 50 years, hitting nearly US$12,000 a ton ($17,347 a ton) in the first half of this year, according to RaboResearch analyst Paul Joules.

“This dramatic increase, fuelled by a global cocoa shortage, is primarily due to a disappointing harvest in West Africa, the source of 70 per cent of the world’s cocoa,” Joules said.

“The International Cocoa Organisation (ICCO) reports a 14.2 per cent drop in global cocoa production for the 2023-24 season, leading to a shortage of approximately 462,000 metric tons and the lowest cocoa stocks in 22 years.”

The full impact is yet to make its way to the supermarket shelves, despite retail prices already rising.

“Due to the lag in the supply chain and existing contracts, the steepest price hikes are anticipated in the second half of 2024 and into 2025,” Joules said.

“This would inevitably lead to higher prices for consumers, particularly for dark chocolates with higher cocoa content.”

To combat rising costs, Joules said, chocolate manufacturers across the globe were adopting various strategies.

“These include ‘shrinkflation’, which is reducing package sizes while maintaining prices, and ‘skimpflation’, which is altering recipes to use less cocoa and more fillers,” he said.

“These tactics, while effective, are often unpopular with consumers.”

And shoppers are likely to have to alter their buying habits in response.

“The increased cost of chocolate is expected to lead to a significant drop in consumer demand. This market correction should balance the cocoa supply shortage and stabilise prices,” Joules said.

“For the western European market, a decline in chocolate volumes in the mid-to-high-single digits is projected, with this becoming more apparent in 2025.”

He said there was already a “structural” shift away from sweets consumption, with a significant decline in volume sales in recent years.

“The current crisis adds to the challenges, making a return to significant growth unlikely in the near future,” he said.