Cocoa prices have surged to an unprecedented high due to dry weather affecting crops in West Africa, reports indicate.
The cost of cocoa, crucial for chocolate production, has doubled since last year, reaching a record $5,874 per ton on the New York commodities market.
This surge is impacting consumers and squeezing major chocolate manufacturers. Hershey, one of the largest chocolate producers globally, cautioned that “historic cocoa prices” could constrain earnings growth.
CEO Michele Buck hinted at potential price increases, stating, “Given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage the business.”
Hershey’s recent financial results revealed a 6.6% decline in sales, attributed to inflation affecting consumer spending on confectionery.
Similarly, Mondelez, known for the Cadbury brand, acknowledged rising ingredient costs, with CFO Luca Zaramella noting “significant increases in both cocoa and sugar.”
UK consumers have felt the impact, with some festive chocolate boxes seeing price hikes of at least 50% over a year.
While overall supermarket food and drink inflation in the UK eased to 8.3% in November, chocolate prices rose significantly higher at 15.3%.
The spike in cocoa prices is primarily driven by poor harvests in West Africa, where Ghana and Ivory Coast are major producers.
The El Niño weather phenomenon exacerbates the situation, causing drier conditions in these regions.
Analyst Jack Scoville explained, “Traders are worried about another short production year, and these feelings have been enhanced by El Niño threatening West Africa crops with hot and dry weather.”
Source-BBC
