As cocoa prices soar due to a global shortage in supply, chocolate manufacturers worldwide are grappling with the prospect of increased production costs. Industry giants such as Mondelez, Hershey’s, and Nestle, along with local bean-to-bar chocolate makers and biscuit manufacturers, are bracing themselves for the impact.
The unprecedented surge in cocoa prices, surpassing $10,000 per ton for the first time, has left companies facing significant challenges in cost management. With an estimated 8% decline in cocoa supply projected for the 2023–24 season, stemming from disruptions in major cocoa-producing regions like Cote d’Ivoire and Ghana, the situation looks dire.
Industry analysts warn of impending price hikes as companies struggle to maintain profitability amidst rising input costs. Some are contemplating strategies like reducing packaging sizes or exploring substitutes for cocoa butter approved by regulatory bodies. However, these measures may only offer temporary relief.
For bean-to-bar chocolate makers relying on fine-flavour cocoa, the scenario appears even more daunting. The diminishing price gap between fine-flavour cocoa and bulk cocoa, coupled with supply issues, threatens their pricing strategies and profitability.
In response, companies are exploring various avenues, from seeking cheaper alternatives to renegotiating contracts with suppliers. Yet, the overarching uncertainty surrounding cocoa prices continues to cast a shadow over the industry’s future.