Is Cocoa in Crisis? – Rising Costs & the Challenges Facing Chocolate

Whether it’s Halloween, Christmas, Valentine’s Day, Easter, or 7 PM on a Tuesday, none of these would be quite the same without one thing: chocolate.

Sure, not everyone loves it, but the truth is most of us are chocolate lovers to some extent if not full-blown chocoholics.

In the UK, 95% of people consume chocolate, with four out of five indulging at least once a week, if not more.

While 3% fewer Americans consume chocolate than their counterparts across the pond, collectively, they eat more than 3 billion kilograms of chocolate confectionary annually.

Chocolate is often considered the definition of decadence, with its rich and delicious flavor bringing people back for more. This iconic taste drives consumers to see chocolate as more than just a food or beverage.

cacao

According to Innova, 55% of people buy chocolate to make themselves happy, 40% to indulge, 46% to treat themselves, and 33% to relax and wind down.

Unfortunately, enjoying some self-love through choco-therapy is about to get a bit pricier.

In some cases, it already has.

But why?

Cocoa in Crisis

Over the past year, the cocoa market has spiraled, with prices rising over 400% over a 12-month period.

This unprecedented price rise is primarily due to an ongoing global cocoa shortage. Estimates from the International Cocoa Organization predict that the global cocoa supply will decline by nearly 11% in the 2023/2024 season.

cacao powder

70% of the world’s cocoa supply is produced by just four nations in West Africa (Côte d’Ivoire, Ghana, Nigeria, Cameroon), with Côte d’Ivoire and Ghana accounting for accounting for 60% of all production.

Therefore, any disruption to the harvests in these countries can send shockwaves throughout the global market, and that is exactly what is happening.

Factors like uncharacteristic weather and crop-damaging diseases are partly to blame. With no major rounds of planting since the early 2000s, aging trees are also leading to lower crop yields.

Additionally, a number of local farmers are deciding to switch to “more lucrative” crops like rubber.

Though this is only a snapshot of the whole picture, the result is putting pressure on international confectionary manufacturers, as if there wasn’t enough already.

Between trending consumer demands, ongoing supply chain disruptions, and the worldwide inflationary environment, the growing cocoa crisis is forcing companies to make tough decisions.

Chocolatey Challenges

It’s true that large CPGs may have an advantage over smaller manufacturers when it comes to weathering this storm.

This is largely due to scale and the potential to take on temporary losses; however, with some companies already facing a 150% increase in cost, endurance isn’t a sufficient solution.

Compounding this issue is the inflationary pressure existing on the global economy as a whole. According to the US Consumer Price Index (CPI), the cost of groceries has climbed 25% since March 2020.

As if this alone wasn’t enough, consumers are getting even less for their money, with shrinkflation pushing them to their wits’ end. Honestly, what they probably need most is a chocolate bar right about now.

Reformulation is one-way companies can try to avoid passing the rising price burden onto consumers.

Still, a straight commodity reduction approach can introduce challenges that might mitigate any cost benefits.

cacao and chocolate

Reducing cocoa in a product will impact taste, but it can also negatively affect color and texture.

Alternative ingredients can restore these aspects, but by the time one reaches parody with the current formulation, the savings may not be worth it.

Any changes could also require changes to package claims and labels.

This does not, however, mean that flavors can’t or shouldn’t be part of the solutions.

Indulging in Sweet Success

Data from Innova suggests that chocolate lovers might be looking for adventure regarding flavors in their favorite sweet treat.

From 2018-2022, over 100 different chocolate flavors saw increased launches.

This is excellent news because it allows developers to potentially address the growing demand for exciting and new profiles while maintaining affordability.

Innovating new products and profiles that differentiate away from cocoa as an ingredient, whether as limited-time offers (LTOs) or staples to a growing confectionary lineup, could help to ensure cost stabilization and supply certainty.

From novel and trending tastes to classic and nostalgic flavors Edlong can help you find the perfect profile to provide indulgence in the interim but also sweet success in the long run.

About the Author: Lauren Hopkins, Sr. Director of Business Development – Americas

I’m a Sr. Director of Business Development – Americas at Edlong with a passion for helping product designers and executives launch the next innovative food products. I have an unwavering belief in my team, their ability, and our products that is backed by a track record of customers who have saved time and resources by working with us. Your next great product is on the horizon, and I’ll help you bring it to as many shelves, tables, and hearts as possible.


Topics: Commodity reductionSweet dairy flavors
Resource Type: Article
Resource Region: EULATAMUS

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