Consumers could soon see higher prices for their favorite Cadbury bars and chocolate cookies. The increase in cocoa prices, due to a global supply shortage, is raising production costs for companies. As a result, these companies might pass some of these additional expenses onto customers.
Major chocolate producers such as Mondelez, Hershey’s, and Nestle, along with local artisanal chocolate makers and biscuit manufacturers, are expected to feel the impact. As cocoa prices surpass $10,000 per ton for the first time, companies are encountering substantial challenges in controlling their expenses.
Industry experts caution that companies, particularly those targeting price-conscious consumers, will face difficulties in preserving their profit margins due to the higher cost of sourcing cocoa. This challenge is intensified by an anticipated 8% reduction in cocoa supply for the 2023-24 season, mainly because of supply disruptions in major cocoa-producing countries like Cote d’Ivoire and Ghana.
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Some companies are already considering raising prices to counter the rising costs. Others are exploring alternative approaches, like reducing package sizes and using cocoa butter substitutes approved by the Food Safety and Standards Authority of India (FSSAI). Nevertheless, these strategies may offer only short-term relief.
For artisanal chocolate makers who depend on fine flavor cocoa, the situation is especially tough. The diminishing price gap between fine flavor cocoa and bulk cocoa, combined with supply challenges, jeopardizes their pricing strategies and profitability.
In light of these challenges, companies are exploring different solutions, such as looking for more affordable alternatives and renegotiating contracts with suppliers. However, the ongoing uncertainty surrounding cocoa prices continues to be a major worry for the industry.
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