MOLINE, Ill. — For all you chocolate lovers, you might have noticed the cost of your favorite chocolatey treats have been getting much more expensive. With chocolate prices at an all-time high, many consumers have been forced to cut back on their Easter spending. The National Retail Federation expects consumer spending on chocolate and candy this Easter holiday to have declined by 6.3%.
News 8's David Bohlman spoke with Mark Grywacheski from the Quad Cities Investment Group about why candy prices continue to rise.
Bohlman: Why are chocolates and candies suddenly becoming more expensive?
Grywacheski: It all ties back to the tiny cocoa bean, often called “cocoa." And the main derivative of cocoa is chocolate.
Like many global commodities (like corn, soybeans, gold and silver), cocoa is bought and sold on the global marketplace. On Tuesday, the price of cocoa reached an all-time high of $10,067 per metric ton. Just 12 months ago, its price was around $2,800 per metric ton. Year-to-date, cocoa prices have risen 138%.
The West African region produces over 80% of the world’s cocoa supply. But that region has been hit especially hard by multiple adverse weather and crop diseases. This has caused the worst cocoa supply shortage in over 60 years. This has sent cocoa prices and chocolate prices, soaring to record highs. And companies often pass on their higher operating/manufacturing costs to the consumers with higher retail prices.
Bohlman: How much longer are these high chocolate costs expected to last?
Grywacheski: Unfortunately, many experts expect this disruption to the global cocoa supply in West Africa to last, and likely worsen, at least for the rest of this year. So, where does that leave the consumer?
Over the past three years, food prices have already risen by a cumulative 21%. So, chocolate/candy manufacturers realize they have to be very sensitive in just how much they can raise prices. If they raise prices too much, they risk a collapse in consumer spending. So, they’ve tried to get creative in how they manage this crisis.
- They’re promoting candies with less chocolate content.
- They’ve reduced the amount of chocolate in many candies. For example, if a candy bar consists of chocolate, wafers and caramel, the manufacturer may use less of the higher-cost chocolate and more of the lower-cost wafers and caramel.
- And like many other industries, they’re using what’s called shrinkflation — which is reducing the product size while still charging the same price.
But that said, chocolate/candy prices are still expected to creep even higher throughout the year.
Bohlman: For those of us who still need to satisfy our occasional sweet tooth, what do experts say to help minimize the impact of these rising chocolate prices?
Grywacheski: Experts say it’s really about the chocolate content. The more chocolate in candy, the more likely the cost will increase. So, if you really need to satisfy that sweet tooth, non-chocolate candies are your best option.
But if you’re really craving chocolate, white or milk chocolate will likely be your cheapest option. The price increase for dark chocolate will be much steeper as dark chocolate has a higher concentration of cocoa. Finally, switching to a much cheaper brand of chocolate is also one of the best ways to keep the cost down.
Quad Cities Investment Group is a Registered Investment Adviser. This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Quad Cities Investment Group and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Quad Cities Investment Group unless a client service agreement is in place.
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