Shoppers could get a bitter surprise in their Easter basket this year. Chocolate eggs and bunnies are more expensive than ever as changing climate patterns negatively impact global cocoa supplies and farmers’ incomes in West Africa.
About three-quarters of the world’s cocoa – the main ingredient in chocolate – is produced on cocoa trees in Ghana, Ivory Coast, Nigeria and Cameroon. But dusty seasonal winds from the Sahara have been fierce in recent months, blocking the sunlight needed for bean pod growth. The season before, heavy rain spread a rotting disease.
With exports from Ivory Coast, the world’s largest producer, falling by a third in recent months, global cocoa prices have risen sharply. Cocoa futures have already doubled this year, trading at a record high above $10,000 a tonne in New York on Tuesday after rising more than 60% last year. Farmers harvesting cocoa beans say the increases are not enough to cover their lower yields and higher production costs.
Still, the high demand for chocolate during Easter is a potential treat for major confectionery companies. Major global producers in Europe and the United States have more than passed on the rise in cocoa prices to consumers. Net profit margins at The Hershey Company rose from 15.8% in 2022 to 16.7% in 2023. Mondelez International, owner of the Toblerone and Cadbury brands, reported a jump from 8.6% the year before to 13.8% in 2023.
“It is likely that consumers will see a price increase for chocolate candies this Easter,” Wells Fargo said in a report this month.
Mondelez said it increased chocolate prices by 15% last year and would consider further price increases to meet 2024 sales growth forecasts. “Prices are clearly an important part of this plan,” chief financial officer Luca Zaramella said in January. “The contribution will be slightly less than we saw in 2023, but higher than an average year.”
Hershey’s also increased prices for its products last year and has not ruled out further increases. “Given current cocoa prices, we will use every tool in our toolbox, including pricing, as a way to manage the business,” Hershey Chairman, President and CEO Michele Buck said during a conference call with investors last month.
Consumer organizations are monitoring developments. In the United Kingdom, British consumer research and services company Which? found that chocolate Easter eggs and bunnies from popular brands like Lindt and Toblerone cost about 50% more this year. It said some of the candy eggs were also smaller.
Cocoa is traded on a regulated, global market. Farmers sell to local dealers or processing plants, who then sell cocoa products to global chocolate companies. Prices are determined up to one year in advance. Many farmers blame climate change for their poor crops. Cocoa trees only grow near the equator and are particularly sensitive to weather changes.
“The damage was severe at the time the pods were to develop,” said Fiifi Boafo, a spokesperson for the Ghana Cocoa Board, referring to the cool trade winds that carry enough dust to block the sunlight needed to grow the trees. Bloom. and produce beans.
Months of rain is also blamed for Black Pod disease, a fungal infection that thrives in cooler, wet and cloudy weather and causes pods to rot and harden.
“Although we have a good price today, that is not the case. The cocoa hasn’t even produced any fruit,” Eloi Gnakomene, a cocoa farmer in Ivory Coast, said last month. “People say we’ve had a little, but those who live there have had nothing.”
Opanin Kofi Tutu, a cocoa farmer in the town of Suhum in eastern Ghana, says the shortage of production combined with higher fertilizer costs makes it difficult to survive. “The exchange rate against the dollar is killing us,” he said.
Chocolate isn’t even one of the traditions Tutu associates with Easter. “I am looking forward to my wife’s kotomir and plantain, not chocolates,” he said, referring to a local sauce made with coconut yam leaves.
To help increase production, authorities are promoting education on agricultural practices that can mitigate the effects of climate change, such as the use of irrigation systems. Ghana’s president has also promised to intervene to help farmers get a better deal.
“With the current trend of cocoa prices in the global market, cocoa farmers can rest assured that I will do right by them in the next cocoa season,” President Nana Addo Dankwa Akufo-Addo said last month.
The National Retail Federation, a US trade association, expects spending this Easter to remain high by historical standards, despite rising candy prices. The latest research showed that consumers were expected to spend $3.1 billion on chocolate eggs, bunnies and other sweets this Easter, up from $3.3 billion a year ago.
In Switzerland, home to the world’s largest chocolate consumers per capita, domestic consumption fell slightly last year, falling 1% to 10.9kg per person, according to industry body Chocosuisse. It linked the dip to the rise in retail chocolate prices.
The country’s best-known chocolate maker, Lindt & Sprüngli, reported higher profitability, with margins rising to 15.6% from 15% a year earlier.
“The Lindt & Sprüngli Group’s business model has once again proven very successful in the financial year 2023,” the organization said in a statement this month, noting that price increases were responsible for most of the growth.
Still, some smaller companies that sell chocolate are finding it difficult to keep up with the spike in cocoa prices as their sales decline.
Sandrine Chocolates, a London store that sells handmade Belgian chocolates, is struggling to survive after decades in business. Its owner, Niaz Mardan, said the UK’s cost of living and weak economy means people are more concerned about food than luxury chocolate, especially when cheaper alternatives are available from major supermarkets.
She has laid off her two employees and is relying on Easter and Christmas sales to stay afloat. “Many times I have thought about closing the store, but because I love the store, I don’t want to close it,” says Mardan (57). “But there is no profit at all.”