The price of cocoa hit a peak in April at $12,261 a tonne, having been about $3,000 in April 2023, but by this month the price of cocoa had dipped again to about $7,750.
ANALYSIS | ANDREW TURNER | Chocolate bars could get smaller or have cheaper ingredients added as manufacturers try to combat cocoa price increases that hit 300% earlier this year, an industry expert warned.
Global prices of the commodity reached an all-time high on the New York Stock Exchange after El Niño winds damaged crops in Africa.
An industry analyst said reducing product sizes (also known as shrinkflation), cutting cocoa content and adding cheaper ingredients such as nuts, fruit and fillings could be used by some firms to absorb some of the increased cost of cocoa.
In Norfolk, chocolate bar producer Gnaw said it was looking at cutting the size of its bars, while Maldon Chocolates said it would not touch its products but had already diversified into selling coffee and ice cream.
The price of cocoa hit a peak in April at $12,261 a tonne, having been about $3,000 in April 2023, but by this month the price of cocoa had dipped again to about $7,750.
Both Norfolk firms said they had seen costs double in that time. Mike Navarro, managing director of Norwich-based Gnaw, said he had seen costs increase, but he was working to minimise retail price increases.
He said he was looking to reduce the size of bars from 100g to 80g over the coming months.
Holding up a 100g bar, he said: “That’s a chocolate bar today.
“On the current cocoa prices, that [a bar about half the size] would be your chocolate bar tomorrow, if you were to take all that price increase we are seeing and reflecting it in material.
“My retails [prices] should not move. I am taking a little bit of weight out and we are looking at how I can take more cost out of my business and I’m taking an absorption of that cost as well.”
Industry expert Steve Wateridge, who analyses soft commodities for research firm Expana, said the price hike could lead some makers to cut costs by adding “padding” to chocolate.
“Cocoa prices have been going up and that is likely to continue because manufacturers work with forward price cover and the higher prices over the last six months will only really feed through to the consumer at the end of the year,” he said.
“Every manufacturer will try to reduce the amount of cocoa they use in products – to some extent they can do that with shrinkflation – although that has been going on for a number of years and has a pretty bad press.
“One way of reducing the cocoa content is to substitute cocoa butter with vegetable fat, which can be made from palm oil, shea nuts and illipe nuts.
“[But] if you substitute too much you can no longer call the product chocolate. It has to be called ‘chocolate-flavoured’.”
Producers shrink production
Mike Simons founded Maldon Chocolates in Maldon, Essex, in 2016, but relocated to Snettisham in west Norfolk after the Covid pandemic.
He said as a small producer he was unable to shrink product sizes – due to the cost of buying new moulds and packaging – and instead was diversifying into selling coffee and ice-cream at his chocolate shop.
“I don’t think we could do it because it would impact the flavour and the quality of the products we make,” he said.
“So I wouldn’t do that anymore than I would the shrinkflation thing that a lot of companies do, so we maintain the size and the quality.
“We should be able to ride it unless it does another doubling or trebling as it has done this year.”
Mr Navarro added: “You could put all sorts of things into chocolate, but chocolate is there to make you happy.
“So I don’t want to put more things into my chocolate that don’t make people happy just because of cost.
“There are also chocolate substitutes on the market. You don’t get the endorphins come through that make you happy and get the flavour.
“You do get the melt, but it’s just brown stuff that melts in your mouth; it’s not chocolate.”
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Source: BBC News.