To learn about the reasons behind the rising prices of chocolate and cocoa, read the overview by journalist RBK-Ukraine Alik Sakhno. This information is reported by Kontrakty.UA.
In 2024, cocoa beans have become the most profitable raw material, surpassing even Bitcoin and the US stock market. This product is essential for producing chocolate and popular hot beverages like cocoa. The reasons for the price increase lie in systemic issues that have accumulated over recent years.
Causes of Record Price Increases and Industry Crisis
The price of cocoa for delivery in March 2024 reached nearly $12,000 per metric ton, marking a 185% increase compared to the beginning of last year, reports MarketWatch. For comparison, Bitcoin increased by 128% last year, while the S&P 500 index rose by only 25%. As of January 5, cocoa futures on the New York Stock Exchange are priced at around $11,500 per ton.
Igor Bondar, the owner of "Cocoa Taste," notes in a comment to RBK-Ukraine that such a record price increase for cocoa is a result of a crisis that has been building up for 15 years. He states that systemic problems intensified over the last 5 years, peaking in the 2023-2024 season. These processes have been influenced by environmental factors affecting the largest cocoa bean suppliers in the world – Côte d'Ivoire and Ghana. These two countries provided up to 65% of global raw material supplies.
"One of the main reasons for the crisis is the aging of cocoa plantations in Africa. Many trees planted in the early 2000s have now reached 25 years of age, significantly reducing their productivity, as the average lifespan of cocoa trees is 20-25 years. The first signs of trouble became evident as early as September 2023 when yields began to plummet. Currently, yields on these old plantations have decreased by almost half. Additionally, new environmental restrictions on cocoa cultivation in preserved forest areas further complicate the situation, forcing farmers to actively renew their plantations," explains Bondar.
He adds that new plants require time to start bearing fruit, typically taking 3-4 years. Therefore, according to the expert's forecast, we can expect to see the anticipated results of yield recovery no earlier than 2026-2027. According to MarketWatch, this agricultural year has ended with the largest cocoa bean supply deficit in the last 60 years.
When and How Much Will Chocolate and Cocoa Prices Increase in Ukraine
Prices for cocoa beans in global markets have shown an upward trend throughout the past year. The first significant price jump occurred in the spring of 2024, when the product's price tripled. The Ukrainian market felt this price increase only after 3-4 months due to existing stocks, but prices later slightly retreated. However, by the end of the year, costs returned to record levels.
"For retail stores and consumers, these changes will be most noticeable closer to spring when old stocks run out, and prices for new batches gradually rise. However, prices on global exchanges are constantly fluctuating. For instance, the price of cocoa beans rose to $12,500 in the summer, then fell back to $7,000. Thus, making precise predictions is challenging – everything can change," shared a representative of "Cocoa Club" with RBK-Ukraine.
Igor Bondar notes that a complete price increase for chocolate and cocoa in Ukraine is expected within the next three weeks. According to him, the increase aligns with exchange dynamics, which, in turn, depend on market trends.
"In the last two months, we've seen the exchange grow by over 50%, with some positions even increasing by 70%. This trend will continue. The key question is which specific product will rise in price: cocoa butter or cocoa powder with fat. If the situation mirrors last year's scenario, both positions could increase. Price increases in hryvnias are expected to be around 70% compared to the autumn. Partial price increases have already occurred – about 5-7% depending on the brand and importer," notes Bondar.
In the coming weeks, the expert anticipates a price increase for chocolate and cocoa in Ukraine of 50-70% compared to autumn 2024. He states that this increase results from rising raw material costs at cocoa bean collection points. Negotiations are currently underway, and new contracts for 2025 are being established, although the harvest has yet to begin.
Igor Bondar explains that cocoa is regulated by two main pairs of products: cocoa butter and cocoa mass, which are used in chocolate, as well as cocoa powder and fat, which are components of glaze and cocoa beverages. Typically, prices on global markets rise for only one of these product pairs.
"Last year, the price increase primarily occurred for the chocolate pair – that is, for cocoa butter and cocoa mass. The raw material increased fourfold, while finished chocolate rose by 2.5-3 times. This is because chocolate consists not only of cocoa but also other ingredients such as fat and sugar, which account for up to 30% of the final product cost," he remarks.
According to the expert's forecasts, if the "chocolate pair" (butter and cocoa mass) increases in price, a chocolate bar currently costing around 40-50 hryvnias could rise to 80-85 hryvnias within the next month. However, if the increase only affects the "cocoa pair" (cocoa powder and fat for glaze), this will not imply such a sharp rise in chocolate prices.
Marina Novikova, the owner of the online store "CacaoGold," mentions in a comment to RBK-Ukraine that the last batch of products had to be purchased at higher prices.
"The price for a kilogram of cocoa mass is already 150 hryvnias more expensive than last year. Now, a kilogram of cocoa mass costs us 1000 hryvnias, and likely the price of chocolate will also rise slightly. We had a large batch that we purchased last year at old prices, but when those stocks ran out, we bought new ones," she explains.
Novikova also adds that the primary products are now sourced from the Netherlands. The cost of a new batch of cocoa powder purchased in December increased by 50 hryvnias per kilogram. According to her, this is already reflected in the prices of finished products.
How Manufacturers Reduce Chocolate Prices
The "Cocoa Club" company informed RBK-Ukraine that in recent years, due to the declining purchasing power of most consumers, cheaper types of chocolate have become the most popular in Ukraine. These are produced by local companies using substitutes or glazes.
Marina Novikova explains that real chocolate consists of cocoa butter, cocoa mass, and sugar with vanilla. According to her, if vegetable fats or other ingredients are added, such a product should be called glaze.
"The crystalline structure of cocoa butter is the foundation that determines the quality of real chocolate. However, in practice, many products that contain sugar and have a brown color are often referred to as chocolate. When the composition of ingredients changes, it affects the price of the finished product. To reduce costs, manufacturers may decrease, for example, the milk content in milk chocolate from 38% to 34% or even lower. They may also reduce the share of cocoa butter, which in turn worsens the taste properties and texture of the chocolate," she notes.
Igor Bondar, the owner of "Cocoa Taste," asserts that quality chocolate in Ukraine will simply move into the premium segment, where consumers will be willing to spend more but consume less. At the same time, he adds, in the average segment (mass-market, middle plus and minus), the amount of chocolate is reduced due to fillers and other ingredients.
"As for finished products, they began to be made cheaper about a year and a half ago. Price reductions occur not only due to new technologies but also by decreasing portion sizes. This has become the norm not only in Ukraine but also in Europe. For example, six months ago, KitKat reduced the size of its bar by 25-27% because they couldn't reduce the thickness of the chocolate layer. Meanwhile, in Ukraine, some manufacturers do the opposite – they kept the same volume but reduced the glaze thickness several times," shares Igor Bondar.
The expert provides the example of so-called Dubai chocolate, which contains only 30-40% actual chocolate, while the rest is filling. Although it is of good quality, it is cheaper than pure chocolate. Such products are in high demand among consumers and carry a significant markup.
He also notes that chocolate prices are reduced not only through sweet fillings but also by decreasing the amount of nuts. Bondar emphasizes that not long ago, chocolate with nuts (almonds or hazelnuts) was considered elite, whereas now