The Cocoa Crisis - What Does it Mean for Chocolate Retailers

If you’ve been keeping an eye on the wholesale chocolate market for the past few years, you will have noticed that prices are steadily going up. And if you’ve been following chocolate related news, you’ll also see that industry leaders are cautioning that we'll only see those prices increase further.

But what’s causing this price hike in the first place, and is the price hike serious enough for consumers and retailers to be worried?

The Initial Worries

In a report by the Washington Post, it was noted the world population consumed 70,000 metric tons of chocolate more than what was produced last year. It predicts that this deficit will grow to one million tons by 2020, and two million tons by 2030.

The report named three main culprits for this apparent shortfall in supply: drought, disease and international demand. Especially dry weather and the prevalence of the 'frosty pod' fungus in West Africa has hit cocoa production hard. This is significant for the wholesale chocolate industry, since about 70 percent of the world’s cocoa comes from Ghana and the Ivory Coast. Couple this with the rising appetite of Asian consumers, particularly the Chinese, and it is easy to assume that we should start worrying about the future of chocolate as an affordable product!

The Input of the ICCO

The International Cocoa Organization (ICCO), however, has released its own report in which it attempts to allay fears about the cocoa crisis. It highlights that cocoa has seen five years of surplus and five years of deficit over the last ten years, as well as the relatively low price of chocolate when compared to historical levels and adjusted for inflation. The ICCO makes special mention of market forces, meaning that production of cocoa will inevitably go up as demand for wholesale chocolate goes up.

Returning Producers

This latter point on market forces is raised in a separate report by Bloomberg, which notes that the cocoa industry in Latin America is starting to gain traction, as demand shoots up around the world. The report touches not only on the growing number of cocoa plantations going up in Central America, but also on the historical role that the region once played in supplying chocolate for the world.

The state of Bahia, in Brazil, used to be the world’s second largest exporter of cocoa, but an outbreak of the 'witches’ broom' disease in 1991, coupled with the then low prices of cocoa saddled farmers with crippling amounts of debt. This effectively forced them to switch from cocoa to other more profitable crops – reducing supply because demand was low. With the demand for wholesale chocolate going up, companies are beginning to churn out cocoa in the region where the cocoa bean was first discovered.

What this Means

All this means that the prices will temporarily go up as producers all around the world struggle to meet demand. Once cocoa production in West Africa and Central America takes off again, experts say the prices should normalise.

In a nutshell, we won’t be seeing the disappearance of chocolate any time soon! Small retailers will still be able to purchase wholesale chocolate for resale without prohibitive costs, however, in the short term, we should all be prepared for prices to go higher than usual.

Angelina Moufftard works for HF Chocolates, suppliers of high quality wholesale chocolate to the retail trade and others who wish to purchase wholesale quantities of chocolate and confectionery. Renowned since 1957, we've sourced the best suppliers from France, Spain, Germany, Holland, Belgium, the USA and UK. Our great tasting and beautifully packaged products also represent excellent value for money.

Writer and Online Marketing Manager in London.