AmbergrisCaye.com Home Forums About Belize Culture Food, Drinks & Recipes Soaring cocoa prices mean less chocolate in treats

A farmer shows cocoa beans at his farm outside Punta Gorda, Belize, in this 2007 file photo. European cocoa traders and consultants said the almost doubling of cocoa prices in the past two years will inevitably force a re-think of sales and marketing strategies of confectioners and increase the appeal of industry consolidation.

LONDON - Soaring cocoa prices, at 30-year peaks, could drive confectioners towards milk chocolate from healthier dark chocolate, and to downsize bars and use cheaper alternative ingredients.

European cocoa traders and consultants said the almost doubling of cocoa prices in the past two years will inevitably force a re-think of sales and marketing strategies of confectioners and increase the appeal of industry consolidation.

Tight supplies and low investment by West African producers drove cocoa futures prices on the ICE market in New York to a 30-year high of $3,510 per tonne on Dec. 16.

Chris Brockman, market research manager at consultants Leatherhead Food Research, said that during an economic downturn, confectioners would do their best not to hike chocolate prices in response to the cocoa market rally.

"We'll see a move to less cocoa content," he said.

A recent shift in tastes towards dark chocolate, which has high cocoa content and is perceived to have health benefits, was likely to swing back towards milk chocolate.

"Dark chocolate has suffered substantially. It was a leading segment of the market," said Ricardo Santos, a senior cocoa trader with the agri-commodity brokerage of BNP Paribas Fortis.

Confectioners could leave prices unchanged but make smaller chocolate bars and use cheaper alternative ingredients, such as cranberries and blueberries.

"The incorporation particularly of 'super-fruits' that have proven health benefits, has been prevalent," said Brockman.

This year, privately owned Mars cut the size of its Galaxy bars by 17 per cent to 125g, after the shelf price rose 26 per cent to $2.02US, according to Leatherhead Food Research.

Confectioners have revived brands, such as Cadbury's Wispa, allowing them to slash advertising budgets compared with a new brand launch, and helped them tackle commodity price inflation.

In Germany, a fierce retail price war means German chocolate makers have not been able to pass on the surge in cocoa prices, said Torben Erbrath, head of the chocolate division of German confectionery industry association BDSI.

Strict German labelling requirements deter the replacement of cocoa with other vegetable oils.

"Other vegetable oil content is only possible up to a five per cent cocoa butter equivalent content but this must be labelled and no one does this in Germany," Erbrath said.

In France, chocolate and other confectionery have trailed growth in overall grocery sales this year and the trend could continue in 2010 as shoppers are expected to stay thrifty, market research firm Information Resources Inc. said.

Whereas food spending fell in 2008, this year has seen a divergence between basic and non-essential products, said Jean-Pierre Gaucher, deputy managing director of IRI France.

"Indulgence categories have not really recovered," he said.

More thrifty shopping habits have benefited supermarket own-brands, which are gaining market share in confectionery, helping consumers who hanker for chocolate in the downturn.

"As a comfort food, chocolate has done well," Brockman said.

Reuters

Chris and Jo of Kakaw chocolate are based here on the island and handmake the most amazing, delicious, melt in our mouth chocolate. Great flavours too - pineapple, ginger. And the truffles - pure heaven.

You can buy their products at the Green House, Wine Devine and many other specialty outlets.

The chocolate is "fair trade" and I believe also organic - but don't quote me on that - I'll have to read the labels again.

But it's an ill wind that blows no-one any good. Higher world prices means more income for Belize.

Incidentally, what does "organic" mean? Does it have a legal definition here, or indeed in the US?

There is in the states not exacly sure what constitutes organic but I know a farm has to be free of fertilizers for a number of years.