From CNBC: 2024-06-15 07:00:01

Global agriculture is facing a significant pricing pressure as cocoa prices have more than tripled in the last year. Weak crop reports have driven concerns about supply, leading to cocoa hitting an all-time high of over $11,000 per metric ton. Major candy brands are likely to face higher costs due to these price hikes.

West Africa, the primary cocoa supplier, has been affected by crop diseases and lower farmgate pricing, leading to a deficit in cocoa production. Influencing factors such as market speculation have driven cocoa prices further up, creating difficulty for food companies. Shrinkflation and rising consumer awareness have added to challenges faced by the industry.

Companies are exploring creative solutions to combat rising cocoa costs, including reformulating recipes, reducing chocolate content, and finding alternatives. Innovation in product offerings, as seen with Hershey’s Jumbo Reese’s Cup with extra peanut butter, is driving premiumization in the market. Some companies are considering stepping away from chocolate flavors to navigate the crisis.

Analysts predict continued challenges in cocoa production due to systemic issues, including climate change and social concerns like child labor. Companies are exploring long-term strategies such as recipe changes, diversifying product lines, and using alternatives to cocoa. The future may see more innovation in snacks, like salty and gummy products, to reduce dependence on cocoa.



Read more at CNBC: Candy makers face steep cocoa prices, get creative