Cocoa prices have hit a 47-year high, and have more than doubled over the past year, according to a new report from Wells Fargo. Unfortunately for chocolate lovers, this means candy is about to get more expensive as dwindling supply impacts prices.
In just the past two months, the global price for cocoa shot up over 75%, from $4,094 per metric ton in January to $7,170 on March 6. As of March 26, the price was $9,622, according to CNBC.
Climate change and global warming have threatened cocoa tree health and bean production. A heavier rainy season caused more disease among the last crop of cocoa trees, while this year’s crop in West Africa, where a majority of cocoa trees grow, is facing dry temperatures and extreme winds from this year’s El Niño. With cocoa trees only able to grow in a narrow area near the equator and requiring a small temperature range of about 20 degrees to thrive, supply has diminished due to volatile weather.
This is the third year cocoa harvests are coming up short, the report said. Between October and February, cocoa shipments from the Ivory Coast were 32% lower than the same time the year before. On February 21, Agri-Way Partners reported that the Ghana Cocoa Board cut its 2023 to 2024 production forecast to a 14-year low, and a 2023 Fairtrade Foundation’s Endangered Aisle projected that cocoa growing regions like Côte d'Ivoire and Ghana may become too hot to grow the crop by 2050.
The International Cocoa Organization projected the global cocoa supply deficit to increase by 405% from 2022-2023 to 2023-2024. With lower production, chocolate manufacturers will have to raise prices.
In a February statement, Michele Buck, president and chief executive officer of Hershey, said that the company is expecting limited earnings growth this year due to the price increase. “Given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage the business.”
Cadbury also indicated in a recent earnings call that it would likely have to raise prices to combat the supply decrease. Mondelēz International, the company behind Cadbury chocolates, said chocolate prices increased 12% to 15% in Europe last year.
The higher chocolate prices could be noticed by consumers as early as this Easter weekend, when candy and chocolate sales tend to surge due to the holiday as consumers buy more—behind Halloween, Easter is the second most popular holiday for buying candy. NACS Daily covered that trend, and other consumer chocolate buying habits, from the National Confectioners Association’s latest State of Treating report released earlier this month.