As cocoa prices soar, consumers will need to brace for pricey chocolates
Nestle ‘monitoring’ situation, Parle hints at 1015 per cent price hike over the next 2 months
Consumers will need to brace for price hikes in chocolates and also in some chocolatecontaining products such as cookies and icecreams among others due to soaring cocoa prices globally.
Cocoa prices have more than doubled this year to over $9,000/tonne as the crops in Ivory Coast and Ghana have been ravaged by disease.
Jayen Mehta, MD, GCMMF (Amul), told businessline that cocoa prices in India have increased by atleast three times.
“So all of the players, who use pure chocolate and are in the consumer space, will be affected. Institutional players, who do not use pure cocoa butter and use vegetable fat, may not feel the pinch,” he stated.
“We will need to keep taking calibrated price increases. But Amul is very competitively priced and so we are hopeful consumers will continue to stay with the brand,” Mehta said.
“We work with Campco and are in constant dialogue with them. They are also passing on these price increases to the farmers. They are also ensuring the supplies are there,” he said.
CAMPCO’S STAND
A Kishore Kumar Kodgi, President, Campco, said based on the market situation, Campco revises its prices for these semifinished products while participating in the tenders called by these industrial buyers. The industrial buyers are procuring it at the revised price, he said.
On the retail segment where it markets readytoeat finished products such as chocol
Industry players noted that although companies usually employ hedging strategies to mitigate price volatility in commodities, fully absorbing the impact of such a decadehigh cost surge won't be easy
ates, he said a decision on revision could be taken in future based on the market situation, he said.
A Nestle India spokesperson said, “We are currently monitoring the situation.”
While typically companies
use hedging strategies to manage price volatility in commodities, industry players said it will not be easy to fully absorb the impact of this kind of decadalhighcost surge.
Mayank Shah, VicePresident, Parle Products, said,
“There has been an unprecedented rise in cocoa prices compared to previous year. No company will be able to absorb this kind of a price hike. So over the next 12 months, there could be significant price hikes taken by companies that make products where cocoa is a key ingredient. We are closely monitoring the situation. We may also need to initially hike prices by 1015 per cent over the next 12 months to cope with this volatility in cocoa prices.”
He said cocoa prices have been seeing a rise over the past year, but large players were able to use hedging strategies and future contracts to manage this volatility and not increase chocolate prices. “But I believe the situation has now changed and they will have to pass on the cost increase to consumers,” Shah said.