Cocoa prices are at an all-time high, how it will impact the chocolate industry? 

Chocolates turned bitter: Your Chocolates may not seem sweeter to you anymore, yes you heard it right. The soaring prices of Cocoa in the global market may cut your pocket as Cocoa prices in the future markets have hit an all-time high of $11,000 per metric ton driven by crop failure in West Africa because of the outbreak of a disease called black pod and swollen shot virus which devasted cocoa crop across Western Africa. The global shortage of Cocoa is going to impact the prices of chocolates in the global market as well. 

Ghana, Côte d’Ivoire, Nigeria, and Cameroon are responsible for producing over 75 per cent of the world's cocoa. It's a huge chunk of the global cocoa supply! But lately, they've been facing some serious challenges. Droughts, fires, and other weather events linked to climate change have led to a significant drop in crop yields. It's a tough situation for these countries, especially considering how important cocoa is to their economies.

The European cocoa Association reported that the number of beans processed for chocolate production fell by 2.5 per cent in the first quarter compared to last year. And you know what's interesting? It's not because people are eating less chocolate, it's because there aren't enough beans to go around.

The monthly report on the cocoa market from the International Cocoa Organization (ICCO) states that since the season began cocoa arrivals at Ivorian and Ghanaian ports have decreased by 28 per cent and 35 per cent respectively, compared to the same period next year. 

Earlier this year, the Ghana Cocoa Board released a report predicting that the country’s 2023– 2024 harvest would reach a maximum of 425,000 metric tons, a 22-year low. The harvest is at a 22-year low and the Cocoa prices have shot up at a 49-year high. 

According to JP Morgan, the rise in cocoa prices is largely due to a global cocoa shortage. Climate change-induced drought has ravaged crops in West Africa, which contributes around 80 per cent of the world’s cocoa output. According to the International Cocoa Organization, global cocoa supply will decline by almost 11 per cent over the 2023/2024 season.

Not So Sweet

The rise in cocoa prices is going to have an impact on pricing. In the international market, global chocolate brands Hershey and Mondelez International have shared their plans to increase the prices of chocolates across the board as the prices have surged by over 250 per cent in comparison to prices last year.  But are prices likely to come down? 

According to JP Morgan Research, the prices of cocoa prices will remain elevated and they are expected to come down slightly over the medium term, tracking around the $6000 mark. But till the time prices hover around an all-time high, the pressure will be on the companies to give it a pass through to its consumers. Reportedly,  Amul Chocolate is also eyeing a price hike of 10-20 per cent due to a rise in cocoa prices.