In the wake of unprecedented climate patterns in Africa, the global price of cocoa has soared to record highs, causing a sudden spike in the price of chocolate.
Shoppers may get a bitter surprise in their Easter baskets this year. Chocolate eggs and bunnies are more expensive than ever as changing climate patterns eat into global cocoa supplies and the earnings of farmers in West Africa.
About three-quarters of the world’s cocoa — the main ingredient in chocolate — are produced on cacao trees in Ghana, Ivory Coast, Nigeria and Cameroon. But dusty seasonal winds from the Sahara were severe in recent months, blocking out the sunlight needed for bean pods to grow. The season prior, heavy rainfall spread a rotting disease.
With exports from the Ivory Coast, the world’s top producer, down by a third in recent months, the global price of cocoa has risen sharply. Cocoa futures have already doubled this year, trading at a record high of more than $10,000 per metric ton in New York on Tuesday after rising more than 60% the previous year. Farmers who harvest cacao beans say the increases aren't enough to cover their lower yields and higher production costs.
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Yet the high Easter demand for chocolate carries a potential treat for big confectionery companies. Major global makers 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 increased to 16.7% in 2023 from 15.8% in 2022. Mondelez International, which owns the Toblerone and Cadbury brands, reported a jump to 13.8% in 2023 from 8.6% the year before.
"It is likely consumers will see a price spike on chocolate candy this Easter," Wells Fargo said in a report this month.
Mondelez said it raised chocolate prices up to 15% last year and would consider additional price hikes to help meet 2024 revenue growth forecasts. "Pricing is clearly a key component of this plan," Chief Financial Officer Luca Zaramella said in January. "Its contribution will be a little bit less than we have seen in 2023, but it is higher than an average year."
Hershey's also raised prices on its products last year and has not ruled out making further increases. "Given where cocoa prices are, we will be using 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 groups are keeping track. 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 candy eggs were smaller, too.
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 set up to a year in advance. Many farmers blame climate change for their poor crops. Cacao trees only grow close to the equator and are especially sensitive to changes in weather.
"The harmattan was severe at the time the pods were supposed to develop," Fiifi Boafo, a spokesperson at the Ghana Cocoa Board, said, referring to the cool trade winds that carry enough dust to block out the sunlight needed for the trees to flower and produce beans.
Months of rain also are being blamed for black pod disease, a fungal infection that thrives in cooler, wet and cloudy weather, and causes pods to rot and harden.
"While we have a good price today, that’s not it. The cacao hasn’t even produced any (fruit)," Eloi Gnakomene, a cacao farmer in Ivory Coast, said last month. "People say that we’ve had a bit, but those living over that way, they’ve had nothing."
Opanin Kofi Tutu, a cacoa farmer in the eastern Ghana town of Suhum, said the shortfall in production coupled with higher fertilizer costs are making it difficult to survive. "The exchange rate to 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 prepared with cocoyam leaves.
To help increase production, authorities are promoting education on farming methods that might mitigate the effects of climate change, such as the use of irrigation systems. The president of Ghana also has promised to step in to help farmers get a better deal.
"With the current trend of the world cocoa price, cocoa farmers can be sure that I will do right by them in the next cocoa season," President Nana Addo Dankwa Akufo-Addo said last month.
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The National Retail Federation, an American trade association, expects spending this Easter to remain high by historical standards despite rising candy prices. Its latest survey showed that consumers were expected to spend $3.1 billion on chocolate eggs and bunnies and other sweets this Easter, down from $3.3 billion a year ago.
In Switzerland, home to the world's biggest consumers of chocolate per capita, domestic consumption melted slightly last year, falling by 1% to 10.9kg per person, according to industry association Chocosuisse. It linked the dip to the rise in retail chocolate prices.
The nation’s signature chocolate maker, Lindt & Sprüngli, reported increased profitability, with margins rising to 15.6% from 15% a year earlier.
"Lindt & Sprüngli Group’s business model once again proved to be very successful in the financial year 2023," it said in a statement this month, noting that prices increases accounted for most of the growth.
Yet some smaller businesses that sell chocolate are finding it hard to keep up with the spike in cocoa prices while their sales decline.
Sandrine Chocolates, a shop in London that sells handmade Belgian chocolates, is struggling to survive after decades in business. The owner, Niaz Mardan, said the U.K.'s cost-of-living crisis and weak economy leave people worrying more about food than luxury chocolate, especially when cheaper alternatives were available at big grocery stores.
She has let go of her two employees and relies on sales at Easter and Christmas to stay afloat. "Many, many times, I thought to close the shop, but because I love the shop, I don’t want to close it," Mardan, 57, said. "But there is no profit at all."
