Price hikes, disappearing products and sourcing struggles – could this be the new normal for the chocolate industry?

Last week, Whittaker’s announced its chocolate was changing. Its cacao will no longer be sourced exclusively from Ghana, with the global cocoa shortage forcing the company to get the key ingredient from “several” other African countries. Whittaker’s promised consumers wouldn’t notice any change in taste, but on the back of a series of disconcerting choc-related headlines this year, it’s a bit of a worry.

On top of this, another unsettling incident: at a North Shore Pak’nSave last week, a shopper was looking for chocolate chip brioche buns, a lunchbox staple for her fussy teens, but they were nowhere to be seen. When she asked a staff member, she was told they were no longer being baked, because chocolate prices had risen too high. When The Spinoff asked for more info, a Foodstuffs spokesperson said that individual stores made their own decisions, but there hadn’t been any “widespread impacts on bakery items that contain chocolate or cocoa”.  A quick search on the Pak’nSave website, however, shows chocolate chip brioche buns appear to be out of stock pretty much everywhere. 

Are these signs of a coming chocmageddon, or is this just the new normal? Here’s what you need to know. 

Why have cocoa prices skyrocketed?

For decades, humans around the world have been enjoying the rich velvety treat that is chocolate, picking up bars (or buns) of the good stuff for a couple of bucks. This is because the cost and supply of cocoa had remained relatively stable, so chocolate has been an accessible luxury. But now, a shift is occurring. The cocoa trees in West Africa, especially Ivory Coast and Ghana, which are estimated to provide 50-70% of the global cocoa supply, are having a hard time. They’re producing less because they’re ageing, and because they’ve been hit with black pod disease and irregular rainfall. Because their production has plummeted, there’s a global shortage of cocoa beans, which is driving prices up.

As well as these tangible pressures on the cocoa supply, market dynamics have been influenced by speculative investors. Prominent figures including hedge-fund managers known for oil trading have entered the cocoa market looking for profit. The influx of speculative investment has contributed to a dramatic increase in cocoa prices.

The price of cocoa reached an all-time high in April – they “shattered the calm of their previous trading range”, said research analyst Paul Joules. According to his report, which was released by agribusiness banking specialist Rabobank in September, prices hit the highest levels in nearly 50 years, nearly USD$12,000 per metric ton, in the first half of 2024. The report declared a “cocoa crisis”.

There’s a lag between the price of cocoa at the manufacturing level and the price we pay for our chocolate at the till, so while we’ve already seen some price increases and changes (RIP buns), it’s expected that more are on the way. Stats NZ data shows the price of a 250g block of chocolate this September was 20% higher than September last year.

Perhaps the price is right

New Zealand chocolate expert Luke Owen Smith looks at the so-called crisis from another angle. “The price of beans has always been too low,” he says. “That’s made it very difficult for cocoa farmers to make a decent living.” Issues with modern slavery and illegal child labour in the chocolate supply chain have been widely reported, particularly in the Ivory Coast and Ghana. Smith doesn’t think the price of cocoa beans needs to go back down, instead saying “we need everyone to realise that cheap chocolate is made possible by a deeply unfair and unsustainable system”.

Smith is an involved advocate in the world of bean-to-bar and craft chocolate. He says that craft chocolate makers have had a headstart in navigating the changed price of cocoa, as “New Zealand’s best makers pay well above the commodity (or even Fairtrade) price for their beans.” This is because they value quality over quantity (and hopefully the people producing their ingredients), because they’re creating chocolate designed to be savoured like fine wine.

In previous pieces of writing, Smith has argued that price increases on chocolate bring it more in line with equivalent affordable luxuries, like wine or olive oil. It may be outside some budgets, but it reflects the product and the labour that goes into making it. “It’s time to rethink the system and accept that chocolate should cost a lot more than what we’re used to,” he says.

In September analyst Paul Joules said, “it does look like we’re in a higher-for-longer price environment”. It’s likely that prices won’t be the only thing to change. Chocolate manufacturers are likely to adopt strategies like shrinkflation – reducing package sizes while maintaining prices, and skimpflation – altering recipes to use less cocoa and more fillers. Or, if Smith gets his way, chocolate consumers will instead treat chocolate like the luxury it is, buying ethical chocolate as a special treat, instead of wolfing down cheap nasty stuff.