Cocoa prices have been on a wild roller coaster ride over the past year and, according to a recent report by The New York Times, there may be no end in sight. What caused the cocoa price chaos? A mix of low rainfall, plant disease and aging trees in 2023 led to a “disappointing crop” in the Ivory Coast and Ghana. The two countries produce roughly two-thirds of the world’s cocoa so the shortage caused prices to climb dramatically – reaching $4,200 per ton in December, the highest it had been since the 1970s. According to the NYT, the price of cocoa has been stable, around $2,500 per metric ton, for the past decade. Financial speculators began to draw attention to the spike, and prices rose further, to over $6,000 per ton in February and peaked at $11,000 per ton in mid-April. Some may say what goes up must come down, and prices fell nearly 30% in just two weeks… but only to rise back up again. What does this roller coaster mean for food makers? Confectionary giants like The Hershey Company and Mondelēz have already been raising prices and will have to continue doing so if the cost of cocoa doesn’t stabilize. During recent earnings calls, Hershey said high input costs will result in “relatively flat” EPS in FY 2024, while Mondelez believes the market will start to normalize around the September/October harvest season. Small, premium chocolatiers will likely bear the brunt of the price hikes. However, most “bean to bar” chocolate brands have long paid higher prices in order to compensate farmers fairly, including the likes of Tony’s Chocolonely, Beyond Good and Alter Eco, among many others. Daniel Maloney, co-founder of Bronx-based craft chocolate maker Sol Cacao, said he was already paying between $9,000 and $12,000 for a ton of premium cocoa, which he purchases from farmers around the world, including in Latin America and Africa: “The premium cocoa price never changed,” he told the NYT. But some early-stage companies are feeling the squeeze. David Jacobowitz, founder of zero-sugar chocolate bites brand Nebula Snacks, shared on LinkedIn on Friday that the company’s “margins are under attack,” claiming that the bootstrapped business is at an “unexpected cross-roads” due to the subsequent shortages. All the while, cocoa-free chocolate maker Voyage Foods announced last week it has closed a $52 million funding round, just weeks after locking in a B2B ingredient supplier deal with Cargill. Win Win (formerly WNWN) is also working to bring cocoa-free alternatives to big chocolate after refining its approach during the Mondelēz CoLab program earlier this year. Could the shortage and price spike accelerate the adoption of cocoa-free chocolate products? We’ll keep an eye out. Go Deeper: Why WNWN Wants To Play Ball With Big Chocolate.
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