Consumers who love buying chocolate around the world are being hit by higher prices. The higher cocoa prices due in part to the climate crisis in major producing countries in West Africa are to blame.
According to the United Nations Conference on Trade and Development (UNCTAD), extreme weather and changing climate patterns have upended crop harvests, which are expected to fall short for the third year in a row, tightening global supplies and raising prices.
The cost of cocoa, the key ingredient for making the beloved sweets, shot up by 136 per cent between July 2022 and February 2024, according to UNCTAD commodities price monitoring.
The price per tonne on the futures market crossed $10,000 for the first time ever on March 26.
The hike has filtered through to consumers worldwide, already reeling under inflation and a generational cost-of-living crisis, UNCTAD said.
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Heatwaves, intense rains
Cacao trees grow close to the equator and are sensitive to changes in weather.
The climate phenomenon "El Niño,” characterised by warmer surface temperatures in parts of the Pacific Ocean, has caused hotter weather and shifting rainfall patterns.
In West Africa, which produces the bulk of global cocoa supplies, crops are increasingly under threat from heatwaves, intense rains and other climate-related risks. This has negatively impacted thousands of smallholder producers, who have seen their harvests diminish.
For example, excessive rainfall in Ghana and Côte d'Ivoire during the fourth quarter of 2023 have led to a flare-up of swollen shoot virus and black pod disease – a condition that causes cocoa pods to rot and harden.
The repercussions are global given that the two countries produced 58 per cent of the world’s cocoa between 2022 and 2023.
The International Cocoa Organization expects a global shortfall of about 374,000 tonnes for the 2023-2024 season compared to 74,000 tonnes last season.
"For this reason, and in the face of short-run, price inelastic world demand for cocoa, supply-side shocks result in price spikes,” says UNCTAD senior economist Rodrigo Carcamo.
The cocoa price hike is just one example of how climate change has far-reaching impacts on society and the economy.
"It shows the importance for all consumers around the world that climate change is tackled, and that climate targets and climate change mitigation measures like nationally determined contributions are met,” Carcamo says.
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Chocolate prices up
As a result of rising cocoa prices, major producers of chocolates globally have either hiked prices, scaled down production or revamped their production. This is because cocoa is a major ingredient for making chocolate.
A typical chocolate snack weighing 45 grams includes about 15 per cent cocoa, so it contains seven grams. This means an increase in the cocoa price of $5,000 per tonne is only capable of increasing the cost of a typical chocolate snack by about four US cents.
But already this year the price of finished chocolate bars has increased by more.
Mondelez International, which makes popular chocolate brands such as Toblerone, Cote D’OR, and Cadbury saw its chocolate prices in Europe, its biggest market, rise 12-15 per cent last year, the company’s CEO Dirk Van de Put said recently.
The company revamped its upscale Toblerone brand last year, launching Tiny Toblerone mini chocolate bars in some U.S. retailers and Toblerone Truffles in Europe. A 7.61-ounce package of Tiny Toblerone sells for $6.58 on Walmart.com. A 3.52-ounce Toblerone bar costs $2.84 on Walmart.com.
Hershey, another major chocolate producer, saw less demand for most of its products last year. For instance, consumers bought fewer Kisses and Reese's cups last year, with Hershey's sales volumes down 6.6 per cent in the quarter ended December 31.
A 306-gram bag of Kisses chocolate sells for $4.84 at Walmart.com. Hershey executives said recently that its latest price hike went into effect this month.
In the United States, American confectionery and food products maker Mars Inc. has increased prices by 15 per cent.
Nestle increased its chocolate prices by 9.5 per cent last year.
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Both Nestle and Mars Inc. have even shrunk their chocolate bars.
For instance, the weight of Nestle’s KitKat Fun Size has gone from 17 grammes to 14 grammes due to the hike in the cost of producing them. Nestle preferred making chocolate bars smaller to maintain quality instead of raising the price.