Chocolate Prices Continue To Soar as Cocoa Shortage Crisis Takes Shape

Valentine’s Day enthusiasts might need to brace themselves for a bitter surprise this year as cocoa prices soar to unprecedented levels. The surge, attributed to crop damage and a cocoa shortage in West Africa, has sent shockwaves through chocolate manufacturers, prompting them to pass on the cost hikes to consumers.

Last week witnessed world cocoa prices hitting a record high for the ninth consecutive day, sparking concerns over prolonged supply shortages. Extreme weather and disease have ravaged cocoa plants in West Africa, the top-producing region, leading to a double blow for the industry.

In London, benchmark ICE cocoa futures skyrocketed to a staggering 4,916 pounds per metric ton before settling at 4,757 pounds per ton, marking a 2.1% increase. Similarly, New York saw ICE cocoa futures hitting a new high of $6,030 a ton, closing at $5,888 per ton, nearly doubling since last year.

A Reuters cocoa poll forecasts a global deficit of 375,000 tons in the 2023/24 season, more than doubling the previous estimation in August. This marks the third successive deficit for the cocoa market, exacerbating concerns over dwindling supplies.

The repercussions of the price surge are already evident on retail shelves, with Hershey anticipating a slowdown in demand as customers become more price-conscious. The company reported a 6.6% decline in sales volumes in the fourth quarter, attributing it to the soaring cocoa prices.

Similarly, Cadbury maker Mondelez witnessed a drop in volumes last quarter, indicating the widespread impact of the cocoa crisis across the industry.

Experts suggest that the current cocoa price surge may persist for another month or two, adding to the pressure on manufacturers and consumers alike. Despite historical precedents of price corrections, the unique circumstances surrounding the cocoa industry in West Africa cast doubts on the likelihood of a swift resolution.

As Valentine’s Day approaches, chocolate lovers may need to rethink their gifting strategies or prepare to dig a little deeper into their pockets for their beloved treats.