As Easter approaches, stores are stocking their shelves with chocolate enthusiasts’ favourite sweet treat, the cocoa-based confection at the centre of this festive season.
However, 2024’s Easter celebrations are set against a backdrop of record-breaking cocoa prices, with everyone from consumers to the entire chocolate industry feeling the pinch.
“As cocoa prices soar to record highs, the chocolate industry’s response has been to subtly shrink product sizes or reformulate ingredients, a trend that hits consumers’ pockets and palates,” wrote Sylvain Charlebois, director of Dalhousie University’s Agri-Food Analytics Lab, in an email to CTVNews.ca.
“This Easter, indulging in your favourite chocolate treats means navigating the bitter realities of shrinkflation and skimpflation, getting less for the same price.”
Thanks to a complex mix of environmental, economic and market dynamics, Charlebois said the price of cocoa is currently around 40 per cent higher than its previous record high, set 47 years ago.
Cocoa contracts — the world benchmark for the global cocoa market — last week reached an unprecedented $7,060 per metric ton, doubling since November and surpassing the record highs of $3,830 in 2011 and $5,110 in 1977.
“It’s quite spectacular,” Charlebois told CTVNews.ca in a phone interview on Tuesday. “I can’t recall seeing another commodity go through a round like this. Basically, cocoa is more than three times more expensive than just two years ago.”
It’s a similar picture in the United States, where retail chocolate prices are up about 17 per cent over two years and will continue to rise, Billy Roberts, senior food and beverage economist at CoBank, said in a report last month.
“Cocoa prices are hitting chocolate candy manufacturers really hard,” Roberts told CNN. “And it looks like it’s not necessarily going to subside anytime soon.”
Multiple factors
Charlebois attributed the surge to a combination of factors, including outbreaks of black pod disease in key producing regions of Africa like the Ivory Coast and Ghana. Together, those regions account for almost 60 per cent of global cocoa production. Additionally, heavy rains have disrupted the transportation of supplies to ports for shipment.
“So there are some challenges to grow cocoa, but there are some challenges to get cocoa to market, as well,” Charlebois said.
Despite the rising cost of chocolate, Charlebois said global demand for cocoa remains high as chocolate gains popularity in the emerging middle class of fast-growing economies, while speculative trading further inflates prices.
Charlebois said major companies such as Barry Callebaut have been aggressively purchasing futures, anticipating continued demand.
Consumer impact
Consumers are already feeling the impacts of these challenges as manufacturers, retailers and chocolatiers pass down their increased costs.
As industry giant Hershey warns of potential profit impacts and Mondelez reports declining sales volumes, Charlebois said the price of chocolate bars in Canada has increased by more than three per cent in a month.
Then there’s “shrinkflation,” the phenomenon that sees products become smaller while prices stay the same.
Over the past 12 months, Charlebois reports, Cadbury Creme Eggs have shrunk by 12.9 per cent, from 39 grams to 34 grams. Nutella jars have undergone a similar transformation, downsizing from 400 grams to 365 grams. The Toblerone bar, once 400 grams, now weighs 360 grams, and the Oh Henry! bar has gone from 62.5 grams to 58 grams.
Other popular treats like Coffee Crisp and Hershey’s Chipits have shrunk by 10 per cent, according to Charlebois’ food lab. In one of the more significant adjustments, M&Ms bags have shrunk by 20 per cent, from one kilogram to 800 grams, while the price of a bag has remained the same.
What concerns Charlebois even more than “shrinkflation” is a concept he refers to as “skimpflation,” in which manufacturers reformulate products with cheaper ingredients to cut costs.
“To me, skimpflation is actually worse than shrinkflation because you’re basically changing the nature of the product itself,” he said.
In the case of chocolate, Charlebois said “skimpflation” involves replacing cocoa with artificial flavours and other novel ingredients, subtly altering ingredient lists without most consumers noticing. Skimpflation is harder to trace and presents a new challenge for discerning consumers.
The wider implications
Thanks to the damage caused by black pod disease to trees in the Ivory Coast and Ghana, Charlebois said he, like Roberts, doesn’t expect the price of cocoa to return to normal any time soon.
“We actually think it’s going to last for a while because many of the trees that are impacted by the disease are old and to plant new trees … it takes a while,” he said.
Moreover, Charlebois said the “cocoa price crisis” underscores a broader conversation about sustainability, consumer awareness and the future of food manufacturing.
Some of the average consumer’s favourite imported products — like coffee, tea and tropical fruits — are just as vulnerable to climate change, disease and supply chain interruptions, a fact Charlebois said we might all need to come to terms with sooner rather than later as climate change accelerates.
“As consumers in Canada we’re spoiled,” Charlebois said. “We import food from all over the world without really thinking twice about it. But now I think that people need to understand the global risks related to producing food, no matter where it’s from.”
With files from CNN
