We'd better get used to the idea of paying more for our cocoa-based snacks, especially since the sector is braced for a third year of deficit. Image: ShutterstockC
hocolate lovers might have noticed their favourite treat getting steadily more expensive in recent months. And according to some analysts, the price hikes could be set to continue. According to NielsenIQ data quoted by the US news network CNBC, chocolate prices have risen by 14 percent in the past year and could be set to rise further.
Indeed, this situation is part of a longer-term trend. "The cocoa market has experienced a remarkable surge in prices […] This season marks the second consecutive deficit, with cocoa ending stocks expected to dwindle to unusually low levels," S&P Global Commodity Insights’ Principal Research Analyst, Sergey Chetvertakov, told CNBC. In June, the issue came to the fore when cocoa prices soared to a new high, approaching levels unseen since the end of 2015. The price of a tonne of cocoa had risen 25 percent since the beginning of the year and by 31 percent over one year.
And the trend shows no sign of slowing, for a number of reasons. One driving force is the fact that many chocolate products contain sugar, and this ingredient has not escaped price hikes either. According to the financial institution Rabobank, the price of raw sugar has risen by 20 percent since the beginning of the year. "For manufacturers, if 60 percent of your goods are sugar, that is a substantial input price increase," analyst Pia Piggott told The NewsDaily. On top of that, the price of cocoa butter has also risen, by around 20 percent year-on-year in June.Also read: AI might have found the formula for chocolate that satisfies a maximum number of fans
In addition, the price of chocolate is being driven by climate-related factors. Côte d'Ivoire, for example, which accounts for 40 percent of the world's cocoa production, is facing floods and very wet conditions that are making cocoa trees prone to disease and rot. Paradoxically, the drought caused by the El Niño weather phenomenon is leading to smaller harvests in West Africa, Sergey Chetvertakov told CNBC. In other words, it looks like we'd better get used to the idea of paying more for our cocoa-based snacks, especially since the sector is braced for a third year of deficit, according to the analyst's predictions.