Soaring cocoa butter prices have upped the cost of chocolate bar manufacture in Europe by 25% in the past 12 months, according to commodity analysts Mintec, which claims the cocoa deficit will worsen.
Cocoa butter prices, which account for a quarter of the ingredients cost of chocolate, have risen 80% year-on-year due to adverse weather in the Ivory Coast, the world’s premier cocoa producer.
This has meant that UK chocolate makers, who were once paying £0.16 for cocoa butter to produce a 100g milk chocolate bar in January 2012, were paying £0.21 in July 2013 – a small but significant difference.
Not offset by falling cocoa powder prices
Prices for cocoa powder, which account for 5-10% of the ingredients cost in chocolate, fell 40% over the same period thanks to increased grindings and ample stocks, but it was not enough to negate mounting cocoa butter prices.
To add further damage, other chocolate ingredients such a sugar, whole milk powder and whey have become costlier in recent months.
Mintec: Cocoa price hike in next six months
Liliana Gonzalez, commodity analyst at Mintec, told ConfectioneryNews that cocoa prices were not expected to let up anytime soon.
“Cocoa bean prices are likely to continue to rise in the next six months as West African production is forecast to be lower than expected. Dry weather conditions in July and August affected the 2012/13 mid-crop, but also affected the pod development of the 2013/14 main-crop in West Africa.”
Cocoa butter - 19%
Whole milk powder - 19%
Sugar - 48%
Whey powder - 2%
Cocoa Liquor (half cocoa butter/half cocoa powder) - 12%
Paper - 50%
Aluminum sheet - 50%
What does the future hold?
According to the International Cocoa Organization (ICCO), cocoa prices on the London futures market were pegged at £1,737 per metric ton (MT) yesterday and $2,715 per MT on the New York futures market. The monthly average for October last year was far lower at $2,464 per MT.
“Increased demand is expected for 2013/14 and 2014/15 as the global economy starts to come out of recession,” continued Gonzalez. “Consumption growth is expected to accelerate, especially in Asia, which is likely to lead to an increase in the supply and demand deficit.”
However, she added that increased grindings were likely to result in the price of both cocoa butter and powder falling.
The UK national press reported that chocolate prices in Britain would triple based on Mintec’s research – but Gonzalez called these projections misguided.
US dark chocolate boom impacts prices
The rising chocolate price trend appears to be go beyond Europe.
Market research firm Euromonitor International recently said that increased dark chocolate consumption in the US was pushing up the price of chocolate because it required more cocoa beans to manufacture.
It has forecast that the cost of one kilogram of chocolate in the US will increase by 45% to $12.25 this year.