Chocolate Prices Set to Soar as Cocoa Costs Surge to Record Highs

Higher cocoa and sugar prices drive up the cost of Easter chocolates. Big companies raise prices to offset losses, while consumers cut spending.

This year, consumers can expect to pay more for their Easter chocolates as the cost of cocoa skyrockets to unprecedented levels, driving up the prices of popular products such as chocolate bunnies and eggs.

Rising Cocoa Prices

Since the beginning of 2024, cocoa futures have doubled in price, reaching record highs. The surge in prices can be attributed to adverse weather conditions and rising temperatures in West Africa, the source of over 70% of the world's cocoa supply. These conditions have put stress on and damaged cocoa crops, leading to a significant reduction in production.

Inflation Impact on Chocolate Companies

Large chocolate manufacturers like Hershey's and Cadbury's parent company, Mondelez, have been impacted by the soaring cocoa prices. In response, they have raised prices for consumers, resulting in increased net profit margins. Hershey's net profit margin increased from 15.8% in 2022 to 16.7% in 2023, while Mondelez reported a jump from 8.6% in 2022 to 13.8% in 2023.

 

Strategy of Chocolate Companies

Mondelez, the company behind the well-known Easter brand Cadbury, has implemented price increases to counter the surge in cocoa prices. It has reported a 13% share in the global chocolate market and expects to achieve revenue growth of up to 5% in 2024, largely driven by higher prices within its chocolate category. Hershey also plans to raise prices further to cover inflation and anticipates sales growth of up to 3% this year.

Impact of Inflation on Food Prices

While overall inflation has been on the decline, food prices, including the cost of candy and sweets, have remained persistently high. In February, the cost of candy and other sweets rose by 5.8% compared to the previous year, reflecting the ongoing impact of inflation on food products. The latest data from the USDA shows that U.S. consumers spent over 11% of their disposable income on food in 2022, the highest percentage since 1991.

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