Yesterday was Valentine’s Day. Did you get a heart-shaped chocolate box? According to one survey, nearly two-thirds of people prefer their Valentine’s Day chocolate in a heart shaped box. I’m in the other third—I don’t care much about the box or the shape, I just like to get chocolate.
John Downs, President and CEO of the National Confectioners Association (NCA) observes that, “Valentine’s Day is an opportunity for people across the country to make simple yet meaningful gestures by sharing chocolate and candy. People see these treats as tokens of love and happiness.”
Unfortunately, the price of love and happiness has gone up due to soaring cocoa prices. According to CoBank, cocoa prices are nearly 65% higher compared to last year, with New York future prices at a 46-year high. Combined with higher wholesale costs for sugar, consumers are paying 9.2% more than last year for confections, outpacing broader inflation.
“The cocoa issues come at a particularly challenging time for manufacturers, considering the increase in sugar prices they’ve been coping with over the past three years,” said Billy Roberts, senior food and beverage economist at CoBank. “While sugar prices have recently retreated, cocoa futures prices remain near record levels and show little sign of any significant movement. That could lead to a further erosion of chocolate volume sales and begin to impact dollar sales as well.”
The problem stems from declining cocoa production yields in west Africa, which account for almost 70% of U.S. supplies, due to unfavorable weather conditions, disease, and lack of fertilizers caused by the Ukraine war. Which means that even Valentine’s Day isn’t immune from supply chain disruptions.
Inability to foresee and manage supply chain uncertainty is a bitter pill manufacturers across industry segments are swallowing, in part due to Covid, in part the result of shifting consumer tastes, in part global conflicts. For chocolatiers, this may mean sourcing alternative recipes and improving production performance, among other strategies. While passing on increased costs to consumers is always a short-term solution, over the long term it leads to reduced consumption, and tighter squeeze on margins. Even for something like chocolate.
At Industry Today, our heart-shaped box of goodies to you is continual coverage of supply chain issues and commentary by leading experts on best practices. Just in time for Valentine’s Day is How to Avoid Disruptions Like Spiking Cocoa Prices by Matt Spooner, Industry Thought Leader at Kinaxis.
How is your organization handling supply chain disruption? To share your experiences and thoughts, please see our editorial guidelines.
As a final thought, while chocolate is often associated with bad health because of its high fat and sugar content, some studies also point to the benefits of eating chocolate. These include lowered cholesterol levels, reduced cardiovascular risks, and prevention of cognitive decline. So don’t feel guilty about enjoying your chocolate, even if you are paying a little more for it.
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Susan Poeton 