Skyrocketing cocoa prices are expected to push chocolate prices higher globally, as producers grapple with rising costs, according to a new report by food and agribusiness bank Rabobank.
The report, Soaring Cocoa Prices: The Worst is Yet to Come, highlights that the impact of the ongoing cocoa crisis will be felt in the months ahead, with companies expected to pass on increased costs to consumers.
“Significantly higher chocolate prices will likely hit shelves over the coming months and into 2025, providing a major challenge for the chocolate sector, which is already battling a longer-term, structural decline in demand,” the report states.
The surge in cocoa prices has been described as a “cocoa crisis” by Rabobank’s RaboResearch team. Cocoa commodity prices have reached their highest levels in nearly 50 years, with futures peaking at nearly USD 12,000 per metric ton in early 2024.
RaboResearch analyst Paul Joules attributed the dramatic increase to a global cocoa shortage caused by disappointing harvests in West Africa, which supplies 70 per cent of the world’s cocoa.
“The International Cocoa Organisation (ICCO) reports a 14.2% drop in global cocoa production for the 2023/24 season, leading to a shortage of approximately 462,000 metric tons and the lowest cocoa stocks in 22 years,” Joules said.
Retail chocolate prices are already on the rise, but the report suggests that the real impact of the cocoa crisis is yet to be felt. According to Joules, chocolate manufacturers are struggling with soaring cocoa costs, which have led to higher retail prices.
“This is illustrated in the most recent quarterly (June) Consumer Price Index data, from the Australian Bureau of Statistics, which showed year-on-year inflation in the Snacks and Confectionery category – of which chocolate is part – was running at 4.6 per cent. This followed a similar-sized year-on-year jump seen in the June 2023 quarter, so the cumulative increase in this category between June 2022 and June 2024 is 21.8 per cent,” Joules explained.
Despite these increases, the full impact is expected in the latter half of 2024 and into 2025 due to existing supply contracts.
In response to rising costs, chocolate manufacturers are employing cost-saving strategies such as ‘shrinkflation’—reducing package sizes without lowering prices—and ‘skimpflation’, which involves adjusting recipes to use less cocoa.
“These tactics, while effective, are often unpopular with consumers,” Joules noted.
The report predicts that the rising cost of chocolate will lead consumers to modify their purchasing behaviour, possibly switching to different types or brands of chocolate, or even opting for private labels or alternative treats.
“The increased cost of chocolate is expected to lead to a significant drop in consumer demand, which should eventually balance the cocoa supply shortage and stabilise prices,” Joules explained.
Western Europe, in particular, could see a mid- to high-single digit drop in chocolate volumes, with this decline becoming more apparent in 2025.
The report also highlights that the global chocolate sector is facing a structural shift away from sweets, making a return to significant growth unlikely in the near future.
