Here’s why your favourite chocolate will be increasing in price!

Shrinkflation, that’s the tip of the iceberg in the chocolate world as cocoa prices surge to unprecedented heights. Today cocoa is trading a whopping 150% higher than it was 12 months ago. Cocoa prices have been climbing steadily over the last 12 months and given that cocoa accounts for between 30% - 70% of your favourite chocolate treats its going to be having a big impact on retail prices over the coming months.

Two big reasons for cocoa price increases are poor weather and speculators.

Poor weather – El Nino

Poor weather conditions, warm and wet (except Cameroon) are affecting the growth of cocoa. 
These erratic weather conditions pose a significant threat to cocoa trees, which require specific climatic conditions to thrive. The result is impaired cocoa yields and quality, while excessive rainfall can cause disease outbreaks and damage crops.

A shortage of cocoa beans will lead to a shortage of grindings which will likely lead to a deficit of cocoa available for this current season.

Cocoa deficits occur when global cocoa production falls short of demand, creating a supply-demand imbalance and driving prices upwards.

Speculators

Cocoa is a traded commodity and financial markets play a significant role in cocoa price volatility and trading amplifies price fluctuations. Twelve months ago cocoa was trading at less than $2500 per tonne, today this has broken through the $6000 ceiling meaning that the main ingredient in chocolate will have increased by more than 150% in one year. 

How will the industry respond
Manufacturers globally are going to have to pass on the cost to consumers. Carol Oldbury, director of Hames Chocolates says “Cocoa prices have increased massively over the past year and we’ve left no stone unturned looking for efficiencies in the business but the large increased cost of cocoa means that we’re going to have to pass the increases on.”

With their eye on costs, for some manufacturers the support for schemes such as The Rainforest Alliance ,Cocoa Horizons and Fair Trade may be less of a priority but that’s not the case at Hames. “We’re committed to trading fairly and sustainably and having a positive impact on all the people’s lives we touch.” says Oldbury. Consumers too are likely to gravitate towards brands who prioritise ethical and sustainable practices.

How will manufacturing thrive

Its going to be a challenging time for the global chocolate industry. Oldbury says  ”We believe private label product innovation and investment in efficiency and sustainability are the way through. We’ve recently invested in Solar for our factory. Not only is the energy renewable but it is expected to provide more than 50% of our electricity usage.”

Chocolate, widely seen as an affordable luxury is likely to be a little less affordable over the coming weeks and months, however its still expected to be the go to sharing treat for the "Big Night In"