Are cocoa and chocolate prices at an all time high?

Chocolate Questions An

Hames Chocolates, the chocolate experts discuss chocolate prices and explain why chocolate prices are seeing record highs.

Cocoa and chocolate prices are closely related as cocoa is a primary   ingredient in chocolate. The prices of chocolate raw materials have steadily been increasing over the last year. Between September 2022 and September 2023 the price of cocoa beans have risen more than 80%. Ultimately this means that chocolate prices have to increase as manufacturers can no longer absorb the increases.

Several factors contribute to high cocoa and chocolate prices and some of these factors apply to both.
  1. Cocoa Supply Shortages: One primary reason for high cocoa prices is a shortage of cocoa bean supply. Cocoa is a crop that is primarily grown in West African countries like Ivory Coast and Ghana. Like other crops cocoa beans are susceptible to weather related challenges such as droughts or excessive rainfall. These weather events can lead to lower cocoa yields reducing the supply of cocoa beans and causing prices to rise.
  2. Rising Production Costs: The cost of producing cocoa beans has been increasing. Some of these increases are welcome, for example rising labour costs can mean better & fairer pay for farmers.  Sustainable farming practices are another example of increases in production costs that is necessary and need to be implemented. This in turn leads to a necessary upward pressure on cocoa bean prices that need to be passed on throughout each part of the supply chain.
  3. Speculation: Cocoa beans are a commodity. Traders who anticipate future price movements may buy or sell cocoa contracts leading to price fluctuations in the cocoa market.
  4. Currency fluctuations: Cocoa is often traded in US dollars which means that cocoa products are susceptible to exchange rates.
  5. Chocolate production costs: Beyond cocoa beans, the price of producing includes expenses such as processing, packaging and distribution. Rising costs in these areas also mean higher prices for chocolate bars or other cocoa- based products such as hot chocolate  
  6. Consumer Demand: Growing consumer demand for chocolate and cocoa based products can contribute to higher prices as this can lead to competition for cocoa beans which in turn drives prices up.
  7. Environmental and Ethical Concerns: Hames Chocolates support organisations such as The Rainforest Alliance and Cocoa Horizons and pay an additional premium for each tonne of cocoa raw material they purchase under these schemes. Hames Chocolates value the role of these organisations in the cocoa supply chain – from helping the planet to supporting cocoa farmers to earn a living income.
Other things that can influence chocolate pricing are:
  • Crop diseases
  • Supply chain issues. In 2022 there was a huge issue in the chocolate supply chain caused by Salmonella contaminated Soya Lecithin which is used as an emulsifier in chocolate.
  • Political unrest in cocoa producing countries
  • The cost of dairy
  • War in countries that produce components such as fertiliser for crops, which in turn can make milk more expensive due to the increased cost of grain used to feed cattle
  • Labour strikes
  • Transport Issues

Are we likely to see a trend where the price of chocolate is going to drop?  “Probably not” says Carol Oldbury, Managing Director of Hames Chocolates.
“In the short term there is likely to be a shortage of cocoa beans if current crop predictions are correct keeping prices high. There may be the odd short-term dip if speculators decide to sell some of their options but its likely to be short lived.”

Addionally, the EU is planning to implement a Deforestation Regulation, which will require all cocoa / chocolate in the EU to be accompanied by a Deforestation Certificate by traders and operators. This certificate will prove due diligence to ensure the products are deforestation free, which is definitely something we should celebrate. From the certification itself to staffing compliance teams to ensure companies are meeting audit requirements – the cost of making chocolate sustainably is on the rise.

How are chocolate manufacturers responding to the price pressures?

Some chocolate manufacturers are reducing the size of their chocolate products whilst others are replacing expensive ingredients such as cocoa butter with cheaper ingredients such as palm oil. At Hames Chocolates we are taking a different approach and are working hard within our factory to increase production efficiency and capacity, in order to counterbalance these rising costs whilst still delivering a high-quality chocolate product.