Costly Cravings: Chocolate Prices Expected to Rise for the Holidays

Chocolate bars
Chocolate lovers may face steep price hikes in the coming months as cocoa prices surge to their highest levels in nearly 50 years.

The report reveals that the sharp increase in cocoa prices is expected to push chocolate costs higher through 2024 and into 2025.

Cocoa Crisis Looms

Rabobank attributes the rise in cocoa prices to a “cocoa crisis” driven by poor harvests in West Africa, the source of 70% of the world’s cocoa. “Since January 2023, cocoa futures have broken past their usual trading range, peaking at nearly USD 12,000 per metric ton in early 2024,” said RaboResearch analyst Paul Joules. Global cocoa production has dropped by 14.2% for the 2023/24 season, leading to a shortage of around 462,000 metric tons, the lowest in over two decades, according to the International Cocoa Organisation (ICCO).

Impact on Chocolate Prices

While many chocolate manufacturers have hedged against rising cocoa prices through existing supply contracts, the full impact is still ahead, says the Rabobank report. “Significantly higher chocolate prices will likely hit shelves in the second half of 2024 and extend into 2025, especially for dark chocolates with higher cocoa content,” Joules explained.

The rising costs are already evident in consumer price data. In Australia, year-on-year inflation for snacks and confectionery, including chocolate, was 4.6% as of June 2024, with a cumulative increase of 21.8% since 2022.

Shrinkflation and Recipe Changes

To cope with rising costs, chocolate producers are turning to strategies like “shrinkflation”—reducing the size of packages while maintaining prices—and “skimpflation,” which involves using less cocoa and more fillers in recipes. While these cost-cutting tactics may help manufacturers, they’re often unpopular with consumers.

As prices rise, consumers are likely to adjust their buying habits, switching to private-label chocolates or opting for alternative treats. “We expect a significant drop in consumer demand as the price of chocolate increases, which could help stabilise the cocoa supply shortage,” Joules noted.

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