Rising cocoa prices may make treats eggs-pensive
The Easter Bunny shouldn’t be taking a big bite out of your wallet for eggs this year, but price hikes for chocolate are on the cards after soaring costs for cocoa – a key ingredient for the sweet treat.
Last week, CNBC Markets reported that the crucial piece of the chocolate puzzle topped US$10,000 a tonne for the first time ever.
That knock-on effect is already being felt at Waikato chocolate makers Donovans.
The general manager of grocery marketing and innovation at owners Profile Foods, Debbie Mckibben, said that “like many other chocolate manufacturers, we recently made a small increase to our pricing”.
There is a silver lining though, at least as far as Easter is concerned.
“We don’t specifically produce Easter eggs or an Easter range, but we do sell chocolate all year round,” Mckibben said.
“As a result of the higher costs of cocoa, chocolate lovers will be paying more for chocolate this Easter.”
She also said that while they can’t forecast future cocoa price movements, “we are keeping a watchful eye on it and are committed to doing our best to minimise cost increases to the consumer”.
Donovans appears to be something of an outlier, however, when it comes to increasing prices.
A Whittaker’s spokesperson told the Waikato Times that while they expect cocoa prices “will no doubt have an impact on the future price of all chocolate” they were holding their prices – for now.
“For our part, we factor the cost volatility of global commodities like cocoa into our long-term pricing to keep prices as stable as possible for our Whittaker’s chocolate lovers, but ultimately for any business, there comes a point when it is no longer possible to keep absorbing cost escalation.
“For Easter this year, we released a limited edition Whittaker’s Choc Cross Bun 250g block, which is priced the same as other 250g blocks in our range.”
The spokesperson also said that in line with their ‘good honest chocolate’ commitment, “we would be sure to let Whittaker’s chocolate lovers know well in advance about any planned changes to our prices and hope they would agree that would be preferable to any changes to our commitments around quality, ethical sourcing, or where we make our chocolate”.
For the smaller players price rises are on the horizon too – but as Raglan Chocolate’s Mike Renfree said, “it’s not that straightforward”.
“There’s a tremendous lag between a commodity price rise and the product on the shelf price rise”.
He said that cocoa prices accounted for 11% of his dark chocolate range, and 7% of his white chocolate range.
He said that while cocoa prices were at historic highs, given other inflation and cost of living pressures, “the price increase isn’t that dramatic”.
Renfree said his prices would remain the same until September.
“After that we will have to re-evaluate.”
The co-owner of Hamilton’s Fruney Chocolate, Andrei Reviakin, also said he expected price hikes would be “more visible in the new few months”.
He said that since they started the business four years ago cocoa prices had doubled twice.
“It’s quite hard for us because we can’t increase the price for our product by the same percent.”
He also said consumers often found it hard to understand why chocolate rises in price while other confectionery items that don’t require cocoa, don’t.
As for the root cause of the hikes, the head of research at Aucklandbased commodities traders Blackbull Markets, Eden Bradfield, said several factors were at play.
He said inflation in Ghana – one of the main cocoa producers – had hit 33%.
He also said commodity market speculation, piling on in the wake of already rising prices, was “artificially pushing up the price”.
“You can buy it [cocoa] cheaper today than in six months,” he said. Like everyone else the Waikato
Times spoke to – apart from Donovans – Bradfield didn’t expect the soaring cocoa prices to translate into more expensive chocolate, at least for now.
“We’re unlikely to see a direct impact in the next few months. You buy cocoa in large quantities.”
As for when he thought prices may begin to fall, “when do the speculators stop speculating?”
The Waikato Times also approached Cadbury’s New Zealand custodian Mondelez NZ, but were told their general manager is overseas and no-one was available for comment.