With a low cocoa supply, this Valentine’s Day chocolate prices are up | CNN Business (2024)

With a low cocoa supply, this Valentine’s Day chocolate prices are up | CNN Business (1)

A shopper browses candy at Hershey's Chocolate World in Hershey, Pennsylvania, on Thursday, Nov. 11, 2021.

Story highlights

Cocoa futures have skyrocketed, doubling in the past year.

Rising cocoa prices aren’t the only concern for customers this Valentine's Day.

Cocoa production is tied to changes in climate, constraining supply.

CNN

Cocoa prices are surging so high that even the biggest chocolate makers are struggling to stay profitable. That doesn’t portend well for your wallet this Valentine’s Day.

Last Thursday, Hershey Co. said it would cut 5% of its workforce after historic cocoa prices and inflation-weary consumers dampened fourth quarter earnings.

Climate issues in West Africa – home to more than 60% of global cocoa production – are damaging crop yields, constraining cocoa supply and causing prices to soar.

Cocoa futures have skyrocketed, doubling in the past year and surging 40% since January; sugar, labor and other factors have also gotten pricier. That means higher prices down the line for consumers, who will shell out more to fill up on their chocolate treats.

“Cocoa is expected to limit earnings growth this year,” Hershey’s CEO Michele Buck said on a call with analysts Thursday. Hershey’s product prices rose 6.5% in the fourth quarter; prices for their confectionery chocolate and other candy products in North America rose 9% in 2023.

Other companies are feeling the pinch as well. Li-Lac Chocolates, which calls itself the oldest chocolate shop in Manhattan, told CNN that their raw chocolate prices are up 13% this February compared to a year ago.

But Li-Lac has kept the price of one key set of chocolate products flat: “We haven’t raised prices on Valentine’s Day products for our customers since 2022,” the company said in an email.

Billy Roberts, senior food and beverage economist at CoBank, said in a report earlier this month that retail chocolate prices are up about 17% over two years and will continue to rise.

“Cocoa prices are hitting chocolate candy manufacturers really hard,” Roberts told CNN. “And it looks like it’s not necessarily going to subside anytime soon.”

The supreme Valentine’s Day sweet

Roughly 92% of Americans say they plan to share chocolate and candy for Valentine’s Day this year, according to the National Confectioners Association. In 2023, Valentine’s Day chocolate and candy sales exceeded $4 billion, the NCA says.

With a low cocoa supply, this Valentine’s Day chocolate prices are up | CNN Business (2)

Heart-shaped gift boxes of Chocolates in a Target store aisle in Queens, New York on January 05, 2023.

Marnie Ives, the chief executive at Krön Chocolatier in Great Neck, NY, said her business is in the thick of the Valentine’s Day rush.

“On Valentine’s Day we expect about 400 to 450 customers in our retail store every day, which is a lot for a small store,” she said.

Yet Ives said rising cocoa prices aren’t the only concern for her customers this holiday.

“The cocoa prices eventually trickle down and affect us when we’re buying things like bulk chocolate,” Ives said. “But at this level where we’re the last mile of the cocoa beans journey, you know, we have a lot of other things that go into chocolate and confections.”

Ives says her company’s handmade, 4-ounce chocolate bars cost $4 in 2020, $4.50 in 2022 and $5 now. Across the same period, the Consumer Price Index for candy and chewing gum increased 28.3%, outpacing the CPI for all items, which rose 19.4%.

“It’s not just chocolate as the inflationary trigger,” she said, noting price increases are also driven by sugar, packaging and labor costs.

Similarly, Karl Schneider, general manager at Holsten’s Candy Store and Diner in Bloomfield, NJ, said his store has implemented standard price increases to manage costs, and his customers see increases in chocolate prices no different than other prices.

“You know, prices never go down, they never go back to the way they were,” he said. “So, is it a concern? I mean, yes, but we’re going to do the best to make it as cost effective for everyone as we can.”

Roberts’s CoBank report detailed that year over year dollar sales for chocolate confections grew 6.4% by December 2023, while volume sales fell 5%.

“It’s kind of an indication to a lot of manufacturers throughout the industry, not just in chocolate confections, but all over the industry, there’s only so much more room that prices can really grow for your average consumer,” Roberts said.

The outlook for cocoa in 2024

Growing up in Ghana, Issifu Issaka’s parents earned money by cocoa farming. Now 31 and married with one child, Issaka has operated an eight-hectare cocoa farm in the Western North Region of Ghana since 2013. He said that the cocoa production in Ghana depends on the climate.

“Currently because of the climate change conditions, my farm is not producing good,” Issaka said. “I’m not seeing good yield from the farm.”

Ivory Coast and Ghana produce more than 60 percent of the world’s cocoa supply, and climate change concerns there pose risks for cocoa. “This past year, drought in West Africa has led to a compression in the volume of cocoa output, and that has significantly increased prices,” said Will Kletter, vice president of operations and strategy at Silicon Valley startupClimateAi.

According to data from ClimateAi shared with CNN, shifts in climate patterns could result in a loss of about $529 million in the cocoa bean value chain in Africa.

Ghana and Ivory Coast could see up to a 30% loss in output, said Sabi Ibarra Guerrero, ClimateAi’s agronomist. These losses are expected to be primarily driven by higher temperatures and intense rain early in the growing season, which increases the likelihood of black pod disease.

The International Cocoa Organization’s December 2023 market report similarly cited black pod disease and swollen shoot virus as damaging the supply of cocoa crops. “This severe rainfall brings fungi,” Issaka said of his own farm. “And this fungi causes the cocoa pod to be black and you need to spray with fungicide.”

The low supply has driven prices up. But farmers are unlikely to reap the benefits of higher cocoa prices on the international market, according to Uwe Gneiting, a senior researcher at Oxfam America based in Accra, Ghana.

Gneiting explained that futures prices do not translate directly into the farm gate price, which is the price paid to the cocoa farmers. In Ghana, the government sets the farm gate price, and Gneiting said often differing interests between manufacturers and the government prevent farmers from maximizing their earnings.

Issaka said that while high demand and low supply raise prices, cocoa farmers are getting squeezed.

“The price for the cocoa is no good for we the farmers, particularly at the producing country level,” Issaka said.

Joke Aerts is the director of credible scaling for Tony’s Open Chain, an initiative by the Dutch chocolate maker Tony’s Chocoloney to end exploitation in the cocoa supply chain. Aerts explained that it can take a “year or two” for profits from cocoa sales “to trickle down to farmers.”

“The price that cocoa farmers receive in Ghana and Ivory Coast should be a price that enables a living income, and currently the farm gate price for cocoa is way below the level that it needs to be,” Aerts said.

With a low cocoa supply, this Valentine’s Day chocolate prices are up | CNN Business (3)

An agricultural worker harvests cocoa pods at a cocoa plantation in the village of Hermankono on November 14, 2023.

Tony’s Chocoloney emphasizes the necessity to pay cocoa farmers the Living Income Reference Price – a price set they developed with Fairtrade that is higher than the farm gate price and aims to calculate the real cost of living for farmers.

According to Tony’s Chocoloney 2022-23 annual report, cocoa farmers in Ghana and Ivory Coast currently earn about $1.42 and $1.23 per person per day, respectively. That wage needs to be $1.96 in Ghana and $2.45 in Ivory Coast to be livable, according to the LIRP.

“Cocoa farmers are running away from the cocoa sector and are moving to other areas,” Issaka said. “The youth are not motivated to go into cocoa farming because when they look at their parents, how they’ve suffered for 40 years, 50 years being a cocoa farmer, they are not interested.”

As sales continue, Issaka said he hopes the cocoa farmers can see impactful results from their work.

“The government should make sure that this rising price will get an impact on the pocket of the cocoa farmer,” Issaka said.

But companies are still banking on Americans’ taste for chocolate abiding, especially around major holidays such as Valentine’s Day, Halloween and Easter.

“The demand for chocolate is always so strong,” said Ives, the CEO at Krön Chocolatier. “People just are not going to give it up.”

Contributing: CNN’s Eva Rothenberg.

With a low cocoa supply, this Valentine’s Day chocolate prices are up | CNN Business (2024)

FAQs

What is the cocoa chocolate industry doing about the shortage? ›

Rising cocoa prices due to supply shortages are impacting chocolate manufacturers globally. Companies are considering price hikes, alternative strategies, and renegotiating contracts to manage increased costs, while uncertainties in cocoa prices remain a significant concern for the industry.

Why are cocoa prices rising? ›

Cocoa prices are rising due to a global supply shortage, chronic underinvestment in cocoa farms and investor speculation. Chocolate brands are grappling with the impact of higher cocoa costs, and this is resulting in price hikes and shrinkflation.

Where Japan splurges on Valentine chocolate even as cocoa prices surge? ›

TOKYO -- Record-high cocoa prices are doing little to take the edge off Japan's appetite for chocolate as candy makers and department stores dish up Valentine's Day treats.

What is happening to the price of chocolate? ›

Cocoa prices are going through the roof. In the last week, they've surged to more than $10,000 per tonne. That's nearly twice the record set 50 years ago.

What is causing the chocolate shortage? ›

The worldwide chocolate shortage comes on the heels of "changing weather" issues that "have threatened cocoa tree health and production," said a report by Wells Fargo. The phenomenon has caused major processing plants in Ghana and Ivory Coast to be unable to source their beans.

What is the problem with cocoa supply? ›

Growing demand for cocoa underscores the urgency in addressing the intertwined issues that relate to the industry's sustainability. A shortage of cocoa beans has led to a near shutdown of processing plants in Côte d'Ivoire and Ghana, the two countries responsible for 60% of global production.

Is there a cocoa shortage 2024? ›

The International Cocoa Organization (ICCO) predicts production will trail demand by 374,000 metric tons in the 2023-2024 season, the third straight shortfall. Chocolate maker Barry Callebaut AG sees a deficit of 500,000 tons, equal to about a 10th of the global market, and the company sees another shortfall next year.

Will cocoa prices continue to rise? ›

As climate change only heightens the threat to cocoa production, prices will likely remain high through 2025, the report said.

Why are chocolate prices jumping? ›

Rising temperatures and weather conditions have stressed and damaged crops in West Africa, which produces more than 70% of the global cocoa supply. Sugar prices are also rising.

Is chocolate cheaper after Valentine's Day? ›

The day after Valentine's Day is the first of four Discount Chocolate Days, including the days after Easter, Halloween and Christmas. Stores nationwide offer steep markdowns on remaining holiday candy, ranging from 15% to over 50%, as they try to make room for incoming Easter sweets.

Why are Valentine's chocolates so expensive? ›

That's because cocoa and sugar prices are on the rise. Since the beginning of the year, there's been a 40% spike in the cost of cocoa globally — marking an all-time high, CNBC reported. Related: Why You Should Live with Empathy Every Day — Not Just on Valentine's Day.

Why is chocolate a big deal on Valentine's Day? ›

Why is chocolate given on Valentine's Day? The Mayans were a civilization estimated to have been around during 500 BCE and used cocoa-brewed beverages during wedding rituals to demonstrate the couple's bitter-sweet future together. And this is what has kick-started the tradition of celebrating love with chocolate.

Who buys expensive chocolate? ›

Many consumers have a love affair with chocolate, but one group in particular is leading the passion for premium: women ages 25 to 54, particularly those affluent, educated and urban.

Is there currently a chocolate shortage? ›

So far they've passed on higher costs to consumers. But the breakneck rally shows no sign of easing any time soon, and major chocolatier Barry Callebaut has warned that acute cocoa shortages will persist into next season. The crunch is being felt most in Europe, the world's biggest chocolate consuming region.

Why is real chocolate so expensive? ›

Chocolate has three main ingredients: cocoa butter, cocoa liquor and sugar. These three components represent 80-90% of chocolate ingredients. Hence, a big portion of chocolate costs come from two commodities: sugar and cocoa. Any significant change in the price of these commodities directly affects chocolate prices.

What is happening in the cocoa market? ›

Unfavorable growing conditions and crop disease on West African farms over the past year have curbed cocoa production and fueled a parabolic rally in cocoa prices. A global cocoa deficit is expected to extend into 2023/24 since current production is insufficient to meet demand.

What is the outlook for the cocoa industry? ›

In a Feb. 29 quarterly update, the ICCO forecast 2023-24 global stocks at 4.449 million tonnes, down 11% from 2022-23. The ICCO also increased its global cocoa deficit forecast for the current season to 374,000 tonnes, sharply higher than the 74,000 tonne-deficit the ICCO estimated for 2022-23.

How is the chocolate industry changing? ›

Innovations in Flavors and Ingredients: Manufacturers continuously introduce new flavors, fillings, and textures to cater to evolving consumer preferences. 5. Globalization: Increasing globalization allows for the exploration of exotic flavors and ingredients, expanding the variety of chocolates available to consumers.

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