This year, consumers may face a bitter price hike for their sweet Easter baskets due to the soaring cost of cocoa reaching record highs.
Cocoa futures have skyrocketed this year, nearly doubling since the beginning of 2024. Adverse weather conditions and rising temperatures have adversely affected and damaged crops in West Africa, the region responsible for over 70% of the world’s cocoa production.
Sugar prices are on the rise as well. Futures for a pound of sugar have increased by approximately 8% in 2024, following a 2.7% rise in 2023.
Continue Exploring: Global chocolate prices set to soar as cocoa processing slows in Ivory Coast and Ghana
Major chocolate corporations such as Hershey’s and Mondelez, the maker of Cadbury, have been transferring these expenses to consumers, and even more so: Hershey’s saw its net profit margins increase to 16.7% in 2023 from 15.8% in 2022, while Mondelez experienced a surge to 13.8% in 2023 from 8.6% in 2022.
Both companies noted declining sales volumes for their latest quarters as consumers become increasingly weary of paying elevated prices.
Continue Exploring: Chocolate giants Hershey and Cadbury plan price hikes as cocoa prices skyrocket
The National Retail Federation anticipates a decrease in Easter spending this year, although the overall amount remains substantial compared to historical norms. According to its recent survey, consumers are projected to spend $3.1 billion on candy this Easter, averaging $24.78 per person. This is a decline from $3.3 billion, or $26.31 per person, compared to last year.
Mondelez, which owns Easter basket staple Cadbury, has been relying on price increases to counter the surge in cocoa prices. The company has said it commands a 13% share in the global chocolate market. It acknowledged price increases of up to 15% within its chocolate category in 2023, and higher prices will likely be a key factor in meeting revenue growth forecasts for up to 5% in 2024.
“Pricing is clearly a key component of this plan,” said Luca Zaramella, chief financial officer at Mondelez, in an conference call in January. “Its contribution will be a little bit less than we have seen in 2023, but it is higher than an average year.”
Last year, Hershey implemented price increases across its chocolate range in response to surging inflation, and it further raised prices on select grocery and food service items at the beginning of 2024. The company anticipates sales growth of up to 3% this year.
The company has indicated it will raise prices to offset inflation, although much of this increase is a carryover from previous adjustments.
Continue Exploring: Cocoa prices skyrocket to 45-year high amid expected crop shortages
The cost of candy and other sweets increased by 5.8% in February compared to the previous year, as per the government’s recent consumer price report. Prices have been hovering around this level since late 2023.
Inflation has been moderating overall but remains higher than what economists anticipated at this stage in 2024. Analysts are becoming increasingly concerned about the effects of persistently high inflation and elevated interest rates on consumer spending and overall economic growth.