Feb. 9 (UPI) — Rising prices of raw cocoa could hurt the bottom line of chocolate manufacturers, who warned this week candy prices could rise as a result.
Cocoa prices have rallied for eleven consecutive sessions, hitting a fresh record level of $5,970, amid persistent concerns over limited supplies, according to market analytics.
The latest data showed that the Ivory Coast, one of the world’s largest cocoa producers, shipped 1.04 million metric tons of cocoa from October 1, 2023 to February 4, 2024, which is down 39% from the same time last year.
Another major market, Ghana, recorded graded and sealed cocoa arrivals that fell to 341,000 metric tons, down 35% from 521,000 tons a year ago, according to Trading Economics.
Tight supplies have been attributed to diseases spreading, high seasonal Harmattan winds, which bring dry weather and negatively impact crop quality and yield, as well as the incoming The El Niño-associated dryness, which is is anticipated to exacerbate the situation.
Hershey Chief executive officer Michele Buck said on a call with analysts, “We can’t talk about future pricing given where cocoa prices are. We will be using every tool in our toolbox, including pricing, as a way to manage the business.”
This could mean that consumers could very well face higher prices for their sweet treats soon. This could come as an added shock when so many consumers are already dealing with higher prices for several everyday items, due to inflation still being somewhat high.
Hershey, which reported a 6.6% fall in sales in the fourth, announced a two-year restructuring program that it said would save $300 million annually and affect less than 5% of its 21,000 global workforce.
“Given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage our business,” Michele Buck told the Guardian.
Cocoa is very sensitive to any kind of weather changes, especially warmer weather.
