This year, shoppers may be in for a painful surprise in their Easter baskets. Chocolate eggs and bunnies are more expensive than ever as changing climate patterns erode global cocoa supplies and the incomes of West African farmers.
About three-quarters of the world’s cocoa (the main ingredient in chocolate) is produced on cacao trees in Ghana, Côte d’Ivoire, Nigeria and Cameroon. But in recent months, monsoons of dust from the Sahara have been so strong that they block the sunlight the pods need to grow. The previous season, heavy rainfall spread a rot disease.
Global cocoa prices have risen sharply as exports from Côte d’Ivoire, the world’s top producer, have fallen by a third in recent months. Cocoa futures have doubled this year, after rising more than 60% last year, and were trading at a record high of more than $10,000 a ton in New York this week. Farmers harvesting cocoa beans say the increased yields are not enough to compensate for falling yields and rising production costs.
However, high demand for chocolate at Easter brings potential benefits to big confectionery companies. Major global producers in Europe and the United States have passed on higher cocoa prices to consumers. The Hershey Company’s net profit margin will increase from 15.8% in 2022 to 16.7% in 2023. Mondelez International, which owns the Toblerone and Cadbury brands, reported net profit margins jumped to 13.8% in 2023 from 8.6% the previous year.
“Consumers may see higher prices for chocolate candies this Easter,” Wells Fargo said in a report this month.
Mondelēz said it raised chocolate prices by 15% last year and would consider further price increases to help meet its 2024 revenue growth forecast. “Pricing is obviously a key component of the plan,” Chief Financial Officer Luca Zaramella said in January. “Its contribution will be a little less than what we see in 2023, but above an average year.”
The Hershey Company also raised prices on its products last year and has not ruled out further increases. “Given cocoa prices, we will use every tool in our toolbox, including pricing,” Hershey Chairman, President and CEO Michele Buck said on a conference call with investors last month. ) to manage the business.”
Consumer groups are tracking. In the UK, British consumer research and services company Which? It was found that the prices of chocolate Easter eggs and bunnies from popular brands such as Lindt and Toblerone have increased by about 50% this year. It is said that some sugar eggs are also smaller.
sensitive trees
Cocoa is traded on regulated global markets. Farmers sell their cocoa products to local distributors or processors, who then sell their cocoa products to global chocolate companies. Prices are set a year in advance. Many farmers blame climate change for crop failures. Cocoa trees only grow near the equator and are particularly sensitive to weather changes.
“The Harmattan weather is severe at a time when the pods are supposed to be developing,” said Fiifi Boafo, spokesperson for the Ghana Cocoa Board, referring to the cool trade winds that carry enough dust that Blocking the sunlight needed for trees to bloom and grow. Produce beans.
Months of rain are also thought to be responsible for black pod disease, a fungal infection that thrives in cool, wet and cloudy weather, causing the pods to rot and harden.
“While we have good prices today, that’s not the case. Cocoa hasn’t even produced anything yet [fruit]”, Eloi Gnakomene, a cocoa farmer in Côte d’Ivoire, said last month. “People say we have a little, but those who live over there have nothing. ”
Opanin Kofi Tutu, a cocoa farmer in the eastern Ghanaian town of Suhum, said a lack of production combined with rising fertilizer costs has made survival difficult. “The dollar exchange rate is killing us,” he said.
Chocolate isn’t even one of the traditions Tutu associates with Easter. “I’m looking forward to my wife’s cotomir and plantains, not chocolate,” he said, referring to the local sauce made from cocoa leaves.
To help increase yields, authorities are promoting education on farming methods that may mitigate the effects of climate change, such as the use of irrigation systems. Ghana’s president has also pledged to step in to help farmers get a better deal.
President Nana Addo Dankwa Akufo-Addo said last month: “Based on current trends in world cocoa prices, cocoa farmers can be confident that I will do the right thing for them in the next cocoa season.”
The National Retail Federation, a U.S. trade association, expects Easter spending to remain high by historical standards this year despite rising candy prices. Its latest survey shows consumers are expected to spend $3.1 billion on chocolate eggs, bunnies and other sweets this Easter, down from $3.3 billion a year ago.
According to data from the Swiss Chocolate Industry Association, Switzerland is the country with the largest per capita consumption of chocolate in the world. Domestic consumption fell slightly last year, down 1% to 10.9 kilograms per capita. It links falling retail prices of chocolate to rising prices.
A ‘very successful’ business model
The country’s iconic chocolate maker Lindt & Sprüngli reported improved profitability, with profit margins rising to 15.6% from 15% a year ago.
“The Lindt & Sprüngli Group’s business model once again proved very successful in fiscal 2023,” the company said in a statement this month, citing higher prices as the main reason for the growth.
However, some small businesses selling chocolate are finding it difficult to keep up with soaring cocoa prices as sales drop.
London’s Sandrine Chocolates, a shop selling handmade Belgian chocolates, is struggling to survive after decades in business. Shop owner Niaz Mardan said Britain’s cost-of-living crisis and weak economy had people worrying more about food than luxury chocolate, especially when cheaper alternatives are available in big grocers.
She laid off two employees and relied on Easter and Christmas sales to make ends meet. “Many, many times, I wanted to close the store, but because I loved the store, I didn’t want to close it,” Mardan, 57, said. “But there’s no profit at all.”
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