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Cheap cocoa may not be the best way to lower the price of chocolate

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Cheap cocoa may not be the best way to lower the price of chocolate

August 04
14:22 2020

LONDON – Chocolate fans will not necessarily benefit from the forecast of a fall in cocoa prices this year. A poll conducted by Reuters on London cocoa futures on Monday showed that the cost of cocoa will be reduced by 10% at the end of the year due to increased production and the impact of the coronavirus crisis on demand.

But chocolate bars may not necessarily be cheaper, because the price of cocoa powder is only one component of the retail price. The impact of the coronavirus lockdown has discouraged impulsive chocolate purchases as people began to concentrate on purchasing essentials. It is expected that the poor economic outlook in the coming months will hit the demand for luxury goods such as chocolate, while sales of celebrations such as Halloween may be weaker than usual.

In addition to cocoa, there are many other costs that will increase the price of chocolate bars. These include other ingredients, such as sugar and sometimes milk or nuts, as well as packaging, marketing, shipping, taxes, and retailer profits.

Chocolate makers usually do not buy cocoa on the London and New York futures markets. The cocoa they attract meets the specifications of futures contracts, but the quality of many of their products is not high enough.

Manufacturers usually buy products on the actual market, and they usually have to pay a premium for the required quality. In the upcoming 2020/21 cocoa season, which will begin on October 1, chocolate producers will also pay an additional US$400 per ton of supply from top producing countries Ivory Coast and Ghana, as part of a plan to combat poverty among farmers. Part.

Chocolate manufacturers are generally reluctant to change product prices and are more likely to adjust size or quality.

For example, the manufacturer of Toblerone introduced a larger gap between strip triangles of certain sizes in 2016 after rising raw material costs, but later changed it back.

You can also make more subtle changes, such as thinning or thickening the chocolate coating on certain confectionery products.

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