Bad news for South Africans who love chocolates

Consumers will have to get used to chocolate that is 30%, 40%, or even 50% more expensive than it used to be as cocoa prices remain elevated. 

This is feedback from Dirk van de Put, CEO of the world’s third-largest chocolate company, Mondelez, which owns brands such as Toblerone, Cadbury, and Oreos. 

Cocoa prices have more than quadrupled since the beginning of 2023, reaching an all-time high of $12,646 per metric ton at the end of 2024. 

Prices have since moderated somewhat to $10,257 per ton in February 2024 but remain historically high. 

Cocoa is the backbone of the $100 billion chocolate industry and is the main driver of higher chocolate prices, although sugar also plays a large role in the cost of the final product. 

Côte d’Ivoire and Ghana are by far the two largest cocoa-growing countries, accounting for 50% of global cocoa production, followed by Ecuador with 9%.

As with other commodities, such as coffee, which has two producers dominating the market, cocoa production is highly vulnerable to external shocks and wild price swings. 

Increased demand for cocoa in recent years has steadily put upward pressure on prices and forced producers to rapidly expand plantations. 

While increased demand has steadily driven prices higher, adverse weather and cocoa swollen shoot virus in West Africa have dramatically raised the cost of cocoa. 

As a result, manufacturing costs for chocolate have surged more than 167% over the past two years, forcing retailers to raise prices.

Van de Put explained at the annual CAGNY event that the price consumers pay typically lags behind the changes in cocoa prices as manufacturers try to build fat into their systems to avoid raising costs. 

This means consumers are shielded from increases, but it also means that when the price of cocoa comes down, there is a delay before prices are cut in stores. 

Thus, even though Van de Put expects cocoa prices to come down towards September and October, consumers will only experience relief much later. 

“At this stage, the costs that we are paying close attention to is, of course, cocoa and, secondarily, sugar prices,” Van de Put said. 

“The price of cocoa is already an issue for us, and the big question we face is how to hedge against future increases.” 

“We believe cocoa over time will come down, not necessarily to the level it was in 2021. In the meantime, we’re doing significant price increases.”

“First, the price elasticity is quite good and probably a little bit better than we would have expected.”

He said consumers will need to get used to chocolate that is 30%, 40%, and 50% more expensive than it used to be.

“But I do think volume will hold up. I do expect it will take us a few years to work our way through this,” he said.

Companies like Honest Chocolate, which operate at the higher end of the market due to their focus on ethical sourcing and organic beans, were already paying a premium, but even that has been surpassed by the current market price. 

“We pay above the market price, but the market price is double what we used to pay in the first place.”

For example, Honest Chocolate is now paying 140% more for the same beans compared to last year’s shipment.