Record cocoa prices are putting confectionery manufacturers under pressure

“All manufacturers of cocoa products such as chocolate or cocoa drinks as well as cocoa-containing foods such as long-life baked goods (e.g. slices with cocoa filling) are currently under pressure when it comes to the procurement and financing of cocoa,” said the managing director of the WKÖ food industry association, Katharina Koßdorff, in a broadcast.

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The stock market price for a ton of raw cocoa has climbed from around 2,000 euros to a record high of over 10,000 euros in the past 12 months and is currently around 7,000 euros. The price explosion hits the food industry with a delay because they often have longer-term contracts for cocoa mass, cocoa powder or cocoa butter.

Poor harvests, plant diseases and strong demand

According to the trade association, the causes of the increase in cocoa prices are poor harvests in West Africa, capricious climate change, plant diseases and strong demand. Heat, periods of drought and an old, low-yielding cocoa tree population have caused a shortage of cocoa. Other industry experts also point to supply shortages and speculation, as well as sharp increases in energy prices and rising costs of living in West Africa. The Ivory Coast and Ghana recently accounted for around 60 percent of global cocoa production.

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The farmers still received comparatively low prices for the cocoa harvest in autumn 2023 because, as is usual in West Africa, they were previously set by the state. “Farming families have hardly received any financial improvements so far,” says Fairtrade Austria boss Hartwig Kirner. Fairtrade partnerships are “particularly important in this economic environment”. The Austrian retail chains and producers would “set a good example here,” praised Kirner.

Markups increased tenfold within a year

Not only has the cocoa on the stock exchange skyrocketed, but, according to the association, also the surcharges charged on it for the food industry, for example for the transport, storage and insurance of the freight or for the services of middlemen. These surcharges have increased tenfold in the last 12 months and have risen from around 250 euros to up to 2,500 euros per ton of cocoa.

The WKÖ trade association did not provide any information about possible price increases for chocolate and confectionery. “There currently seems to be no easing of the situation in sight. We expect the next cocoa harvest in October 2024,” said the association’s managing director.

Many supermarket chains are currently conducting intensive price negotiations with chocolate and confectionery manufacturers. According to the German “Lebensmittel Zeitung”, the Milka manufacturer Mondelez has imposed a delivery stop on Rewe (including Billa, Billa Plus, Penny) because the companies have fallen out in price negotiations. Chocolate manufacturers are under pressure due to increased cocoa prices. Many producers have therefore raised prices or announced increases this year.