Soaring cocoa prices are likely to take their toll on chocolate companies, the International Cocoa Organisation (ICCO) has warned.
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A number of factors have fed into the steep increase in cocoa prices, which last week increased to more than GBP2,000 (US$2,786) per tonne for first time in almost 24 years, a spokesperson for the London-based cocoa body told just-food today (26 January).
“The major factor inflating cocoa prices is a supply and demand situation. We had two supply deficits in recent cocoa harvests and we expect that the next harvest will fall short of demand also,” the spokesperson said.
“In London, the weakness of the pound is also hurting the cocoa price.”
The ICCO spokesperson said that the difference between supply and demand is likely to continue for the “foreseeable future”, meaning that cocoa prices will remain high.
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By GlobalData“Chocolate makers have already started to increase the price of their products, reformulate their recipes and make their products smaller,” the spokesperson observed.
However, he warned that while these measures might shore up margins in the short term, they are likely to have a negative impact on consumption patterns.
“Clearly there will be an impact on chocolate demand. Many analysts have said chocolate is ‘recession proof’ but when you have a situation where prices are increasing at a time of recession there is likely to be an effect on demand.”
