Global Markets, News

Price and demand for cocoa continue to rise with ongoing shortage

According to RaboResearch data, the global price of cocoa is soaring, with current data analysis showing Australian retail chocolate prices overall are up 8.8 per cent on the previous year.

The global agribusiness bank revealed the global price of cocoa, a key ingredient in chocolate, has sky-rocketed more than 200 per cent (in Australian dollar terms) on the previous year, off the back of international supply shortages.

RaboResearch associate analyst Pia Piggott said the world is into its third season of a “global deficit” of cocoa, as diminishing supply struggles to keep up with firm demand.

According to Piggott, a range of issues has seen a reduction in cocoa production in the Ivory Coast and Ghana, in West Africa, where 60 per cent of the world’s cocoa beans are grown.

“There is no single root catalyst for this deficit. It is a combination of a range of agricultural and other factors, including adverse weather conditions, ageing trees and disease in crops,” said Piggot.

“There are also other challenges for growers, including increasing sustainability regulations and requirements – including in import markets – which are also limiting supply growth. These include European Union deforestation regulations, which limit area expansion and increase traceability requirements.”

Piggott said retail prices for chocolate have risen over the past two years, broadly in line with the overall rise in food price inflation.

“However, while price inflation has now receded in many food categories, we are continuing to see it remain high for chocolate,” said Piggot.

RaboResearch data has highlighted many chocolate products have been subject to prices rises or shrinkflation, where the prices remain stable yet the product size or quality is decreased.

With cocoa costs forecast to remain high on the back of long-term supply issues, Piggott said, the bank expected continuing higher prices for chocolate products into the future.

“We expect inflation on chocolate products to remain high and we may see more shrinkflation or product innovations and reformulations as manufacturers seek to minimise cost increases for consumers,” said Piggot.

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