Chocolate, beloved by millions worldwide, is now facing a significant increase in cocoa bean prices. This is due to disease outbreaks and declining harvests that are reshaping the chocolate production landscape. For chocolate lovers and food industry players, understanding the ripple effects of this situation is crucial.
As highlighted in the latest quarterly bulletin from the ICCO (International Cocoa Organization), the cocoa industry is currently grappling with an unprecedented deficit. The global shortage is projected to reach 374,000 tons due to a drastic reduction in supply. Experts even estimate a shortage of up to 500,000 tons this year, marking the largest cocoa supply deficit in history.
This decline is caused by several factors, including:
Poor weather conditions: Droughts and floods in key cocoa-producing areas have negatively impacted harvests. Aging cocoa farmers: Many cocoa farmers in West Africa, the primary source of cocoa beans, are elderly and unable to rejuvenate their crops. Disease outbreaks: Fungal diseases such as black pod disease and the swollen-shoot virus are attacking cocoa plants, leading to lower yields and higher production costs.
Around 70% of the world's cocoa comes from these disease-prone areas, highlighting the importance of sustainable practices and innovative solutions to safeguard the future of chocolate.
The Domino Effect: Soaring Cocoa Bean Prices
The impact of the plummeting cocoa supply is not limited to the industry itself. Consumers are also feeling the effects, with chocolate prices continuously rising.
The price of cocoa beans has experienced a dramatic surge. In March 2023, the price was around $2,620 per ton. However, as of April 23, 2024, the price has skyrocketed to $11,771 per ton (more than quadruple). This raw material price increase will inevitably be passed on to consumers by chocolate producers.
How is the Chocolate Industry Reacting?
Amid this situation, the chocolate industry faces two options: absorb the increased costs or pass them on to consumers.
Some chocolate producers may choose to raise their product prices directly. This will undoubtedly make chocolate more expensive for consumers.
However, there are also concerns that the chocolate industry will employ cost-saving measures to keep prices low. Practices such as "shrinkflation" (reducing package sizes while maintaining prices), lowering cocoa content, and using unhealthy additives like sugar or cheaper cocoa butter equivalents (CBE) are expected to become more common.
Changing Supply and Demand Dynamics
On one hand, disease outbreaks in cocoa plantations are causing global cocoa bean supplies to shrink. On the other hand, chocolate demand continues to rise, especially in emerging markets like China and India. This imbalance between supply and demand is driving cocoa bean prices higher.
Chocolate producers, faced with higher production costs, must either absorb these costs or transfer them to consumers.
Consequences for Consumers
For chocolate lovers, the impact of rising cocoa bean prices is palpable. Retail chocolate prices are likely to increase, reflecting the higher production costs borne by producers.
Additionally, product quality or size may change as companies adapt to cost pressures.
At Tulip Chocolate, we are committed to not compromising on the quality our customers expect and have decided to maintain our quality standards.
Looking Ahead
Predicting the outlook for cocoa bean prices in 2025 is complex due to the various factors that can affect the market. However, given the unprecedented situation in the cocoa industry, every producer in this industry is entering uncharted territory regarding the trajectory of cocoa prices.
Tulip Chocolate continues to monitor the market situation and will always keep chocolate lovers informed. We at Tulip Chocolate promise to uphold the quality and standards our customers expect and will not resort to using CBE or other cost-saving measures that affect product quality.
