Here’s why chocolate is costing you more

Chocolate lovers are being warned they may have to pay 10% to 20% more as the price increases and is likely to stay high for the foreseeable future.

RaboResearch associate analyst Pia Piggott said the increased price of two main ingredients, cacao and sugar, had the biggest impact on the price of chocolate.

Global cacao prices lifted by 27% in the past year, Piggott said.

Poor growing conditions and reduced production in major cocoa regions of West Africa had created a two-year supply deficit, which was likely to stretch into a third.

“The major production regions, particularly in the Ivory Coast, which accounts for more than 40% of global cocoa production, had very wet conditions and flooding, which has been causing rotting and disease in the trees,” she said.

”We’ve already seen some chocolate brands go up 10% to 20% in price in the past 12 months.”

The risk of further decline in cacao production was possible because of a coming El Niño weather pattern, she said.

As a result the bank forecast cocoa prices would stay high into 2024, Piggot said.

The price of raw sugar was up 20% in the year to date, she said.

Sugar typically accounted for 60% of the weight of an average bar of milk chocolate, she said.

A Countdown spokesperson said in the last year it had cost increases from suppliers that had to be passed on to consumers.

Foodstuffs spokesperson Emma Wooster said prices charged by suppliers for confectionery products had increased.

“The average cost price for confectionery has increased 10% over the last year and has resulted in higher retail prices to consumers across the market. This is in line with what’s been reported in the Grocery Supplier Cost Index, which measures the change in the cost of all grocery goods charged by suppliers to the Foodstuffs North and South Island cooperatives,” Wooster said.

A Nestlé spokesperson said changes to the price at which it sold chocolate were only made after considering all the variables, of which the price of cocoa was just one.

“We are working hard to keep prices as low as possible in the face of the inflationary pressures facing our sector.’

There could be some price relief as dairy commodity prices came down.

RaboResearch senior dairy and food retail analyst Michael Harvey said a decline from the record and near-record prices a year ago for a number of dairy commodities provided some relief for chocolate manufacturer margins.

Piggot said confectionery manufacturers took steps to offset cost pressures, but were mindful to avoid too much “demand destruction” from higher prices leading to consumers buying less chocolate.

“The main step chocolate manufactures have been taking to offset cost pressure is increasing prices,” she said.

Shrinkflation, when the price stays the same but the actual size of product was smaller, was also an option to offset cost pressure, however this normally took much longer to implement, she said.

“With manufacturers trying to keep market share in the category, they are still putting some of our favourite chocolates on sale to keep us buying them,” Piggot said.

A Mondelēz International spokesperson said it would hold prices for as long as was viable.

“The input cost increases for food manufacturers come after considerable volatility over the previous few years as well. While we were hoping for more benign conditions, following significant supply chain challenges and fuel cost increases related to global events such as Covid-19 and Russia’s invasion of Ukraine, pressure has only been added to through these other cost rises.

“Sometimes we have to make adjustments to ensure we can continue to manufacture and distribute our snacks sustainably in this environment.”