Chocolate Prices Are Skyrocketing — and it Has Very Little to do With Inflation

Cocoa prices are at a 47-year high.

Your sweet tooth cravings are about to get more expensive.

In 2024, the price of cocoa hit an all-time high, reaching a staggering $5,874 on the New York commodities market, according to BBC. This, however, wasn't some one-off event, but rather, the culmination of a more than two-year uphill swing in prices that's already rocking the confectionary industry and is trickling down to consumers like you.

“Historic cocoa prices are expected to limit earnings growth this year,” Michele Buck, the president and CEO of the Hershey Company, shared during a Feb. 8 earnings call. This prediction would mark a continuing trend, as the company also posted a net income decrease of 11.5% for its fourth quarter of 2023. And Hershey is far from alone. As BBC reported, Cadbury also identified the rising costs of ingredients, including both cocoa and sugar, as one of its major challenges to come. And while inflation certainly plays its part, much of the increase in cost appears to be out of their control.

In the last cocoa season, the Swiss Platform for Sustainable Cocoa reported, nearly 5 million tons of cocoa were produced around the world. However, the mass majority of it — 60% — was grown in Côte d'Ivoire and Ghana, followed by Ecuador with just 9%.

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Cocoa, like coffee, is a vulnerable plant to climate change. And, as the 2023 Fairtrade Foundation’s Endangered Aisle report states, cocoa growing regions like Côte d'Ivoire and Ghana may become too hot to grow the crop by 2050. (Some studies refute this claim, but do note that changes in rainfall may also negatively impact the crop in many of the same ways.) And, the current El Niño weather pattern is causing drier than normal weather in the region, which is drastically reducing yield. But the unfavorable weather isn't the only bad news.

On February 21, Agri-Way Partners reported that the Ghana Cocoa Board cut its 2023 to 2024 production forecast to a 14-year low due to that unfavorable weather coupled with crop disease, and smuggling. In fact, smuggling accounted for the loss of 150,000 tons of cocoa in Ghana in the last season, adding up to $600 million in lost revenue, according to the AFP. Things are getting so dire that Agri-Way noted "cocoa farmers are unlikely to fulfill some of their cocoa contracts for a second season." And, these unfulfilled contracts have led to several cocoa plants in the region halting processing as they can no longer afford to buy the raw beans, Reuters reported, creating the perfect storm.

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For consumers, this likely means much higher prices to come. As Investopedia reported, retail chocolate prices in the U.S. increased 10% in 2023, at a rate about three times higher than consumer inflation. Already in 2023,  Hershey’s raised its prices on its confectionery chocolate and other candy products in North America by 9%. But, according to Buck, the company is going to do everything it can before resorting to raising prices again, including cutting 5% of its global workforce.

"While historic cocoa prices are expected to limit earnings growth this year," Buck added on the call, "we believe our strong marketing plans, innovation and brand investments will drive top-line growth and meet consumers' evolving needs."

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