Chocolate prices are expected to soar again as cocoa commodity prices hit their highest level in nearly 50 years, the research arm of global agriculture and commodities bank Rabobank has warned.
Cocoa prices peaked at nearly $12,000 USD per tonne in the first half of 2024 in response to a global cocoa shortage.
Global production for the 2023-2024 season is down 14.2%, according to the International Cocoa Organisation, due to low yields for the third year in a row in West Africa where 70% of the world’s cocoa is grown.
The region, particularly the main cocoa-producing countries of Côte d’Ivoire and Ghana, has experienced severe weather, disease in cocoa trees, and chronic underinvestment in cocoa farms, resulting in what the RaboResearch report described as “deeply rooted, structural supply issues that will not be quickly fixed”.
The high prices and low supply are expected to flow on to retail chocolate prices over the next few months, on the back of prices which had already begun to rise due to inflation before the cocoa crisis began.
“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,” RaboResearch analyst Paul Joules said. “This would inevitably lead to higher prices for consumers, particularly for dark chocolates with higher cocoa content.”
According to Australian consumer price index figures for June 2024, the year-on-year inflation in the snacks and confectionery category was 4.6%, building on a similar jump in 2023. The cumulative increase from June 2022 to June 2024 is 21.8%, Joule said.
He said consumers could see their favourite chocolate bars become smaller or drop in quality as companies try tactics of shrinkflation and skimpflation to reduce the cost of the product while maintaining the same price.
“These tactics, while effective, are often unpopular with consumers,” he said.
In a statement, a spokesperson for Nestlé Oceania said the cost of cocoa was “a considerable factor in the price of our chocolate, but not the only one”.
“We have not passed on all the cost increases, but are working hard to keep prices as low as possible to keep our products affordable, while continuing to deliver the same quality and delicious tasting products that people know and love,” she said.
A spokesperson for Mondelez International, which owns Cadbury, said the company was experiencing higher input costs and, without compromising taste or quality, had “a range of actions we can take when necessary to ensure ongoing supply which may include a mix of RRP (recommended retail price) increases, changes in pack sizes, and/or changes in the mix of products and promotions across markets”.
The RaboResearch report suggests consumers will alter their buying habits as prices increase, creating a drop in demand “in the mid-to high-single digits” and balancing out the cocoa supply shortage.
But it warned the reprieve could be short-lived, as cocoa is one of seven commodity products that will be subject to the European Union’s regulation on deforestation (EUDR), which comes into force at the end of 2024.
The EUDR mandates that cocoa, coffee, soy, beef, palm oil, wood and rubber – all products identified as major sources of deforestation – will no longer be sold in the EU if sourced from areas affected by deforestation. Cocoa production is a major contributor to deforestation in West Africa.
