(3 Minutes Read)
Chocolate makers will feel the impact of higher cocoa prices over six to 12 months. The supply crunch has already prompted some chocolatiers to raise retail prices or produce smaller bars. Higher costs will force manufacturers to use more substitutes for cocoa.
Chocolate manufacturers probably are in for a shock since there can be consumer resistance to the rallying high prices. High prices will force consumers to cut their consumption, which in turn forces the manufacturers to upend the prices.
Cocoa futures have more than doubled this year on the back of a huge global shortage. But shoppers are yet to feel the full impact since chocolatiers secured and hedged supplies at lower prices. Chocolate companies will inevitably have to start passing on higher costs. As prices increase, there will be a dampening effect on the demand, which will force chocolatiers to increase the prices.
Cocoa futures surged to a record of more than USD 11,000 a ton in New York in April as poor harvests in West Africa curbed output. Companies that secured supplies well in advance have been relatively protected, but they’ll face higher costs as they buy at prices that are currently much higher.
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Chocolate makers will feel the impact of higher cocoa prices over six to 12 months. The supply crunch has already prompted some chocolatiers to raise retail prices or produce smaller bars. Higher costs will force manufacturers to use more substitutes for cocoa.
