Today’s post is by Troy Lowe; Vice President of Development at SafeSourcing.
Because of the continuing increase in the cost of cocoa the manufacturers are now forced to create new treats with fewer or none of the expensive ingredients. Because chocolate is not a necessity people will be less likely to purchase the treats and cut back consumption because of continuing inflation. Increasing the prices is starting to affect sales so they are resorting to reducing the size, relying on automation to help reduce cost and they are promoting other products with less cocoa and other flavors. So, why are prices are increasing.
You may have noticed when you were out shopping that along with everything else, that the price of chocolate has risen. It might as well everything is else is going up why not one of favorite snacks. The cost of the main ingredient, cocoa, has been rising upward over the past two years and over the past year it has more than doubled. This month it broke an all-time record from back in 1977. The prices are surging so high that even the biggest chocolate makers are struggling to make profits. Last week Hershey Co. announced that they are cutting 5 percent of its workers because of the historic cocoa prices and inflation-weary consumers helped lower their fourth quarter earnings. One of the reasons behind the significant increase is the climate issues in West Africa where more than 60 percent of the global production is produced. According to experts’ cocoa futures have skyrocketed, not only have they doubled in the past year it has also gone up an additional 40 percent since January. According to a senior food and beverage economist, the rising cost of cocoa has made retail chocolate prices rise about 17 percent over the last two years and it will only continue to rise. One company that produces 4-ounce chocolate bars stated that the bars were selling to $4 in 2020 and is now up to $5 a bar. They also noted that it is not just the cost of the chocolate but also the cost of sugar, cocoa butter, packaging, and labor costs.
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