Cocoa prices remain troublingly high for the sector – but will this bite on the vital Easter market?
Cocoa farming in West Africa, photo, WCF
According to Financial Times market data, cocoa market prices were up 143% on January 15 compared to the same time last year. Despite this, consumer demand continues to rise, so just how will the cocoa market survive the upcoming Easter demand? Thijs Geijer, Senior Sector Economist covering the Food and Agriculture sector at ING, offers a guest post on this major issue.
Why are chocolate prices still high? What is causing the market trend for cocoa? “It’s a combination of unfavourable weather over the past seasons and demand remaining quite firm. This has led to falling stocks of cocoa leaving markets quite sensitive to any (negative) news. As an indication UK Consumer prices (CPI) for chocolate were up by almost 12% (11.7) in December compared to year earlier.”
How has increased prices affected chocolate producers and businesses? “If they don’t put up prices or lower costs by changing recipes they face eroding margins and risk becoming unprofitable. But raising prices too much risks losing out consumers who will then turn to other treats.”
With Easter coming up, how do you think this will impact the price and quality of Easter eggs? What can consumers expect/ how to know they are getting best value products? “There is a time lag in the transmission from changes in global market prices to consumer products, for example because chocolate makers have longer term contracts or hedges that protect them from price increases in the short term. So, we do expect that high cocoa prices will continue to resonate in consumer prices in 2025 as well.”
What changes are you seeing/ expecting to see in terms of demand and compared to Christmas 2024 and Easter 2024? “Amount of cocoa processed by cocoa industry in Europe fell a bit in Q3 2024 potentially pointing at weaker demand due to higher prices, still Q2 figures were still quite strong. Latest figures for Q4 point at quite a drop in cocoa grinding figures. So, seems that high prices are really starting to bite and reduce consumer demand”.
