Cocoa prices have been soaring this year, hitting record highs and causing headaches for candy companies.
In recent years, the price of cocoa had hovered at around $2,500 per metric ton. But reports of a weaker-than-expected crop set off concerns about supply, sparking the commodity's run-up in recent months. Cocoa hit an all-time high of more than $11,000 per metric ton in April. The price surge has since eased off slightly, but the crop is still commanding well above what food companies are used to paying.
On recent earnings calls, executives from Mondelez and Hershey said they believe market speculation is driving at least some of the surge in cocoa. Prices could come down in September, once more information about the new crop is available — but that doesn't mean that they'll return to normal. One hypothetical solution, proposed by Fachner, could involve cutting back the number of chocolate chips from 12 to nine in a certain product. He also said J&J is looking for any possible substitutes that could work for some of its recipes.Chocolates are displayed on a shelf at Celine's Sweets in Novato, California, March 22, 2024.
For food companies that don't primarily deal in chocolate, they might start avoiding the flavor, especially when it comes to new products.The long tail of the cocoa crisis "There are examples where companies are increasing the amount of non-cocoa additives, like sugar, more economical things like cocoa butter equivalents, shea butter, palm oil, coconut oil, those types of things," Rosenstock said.Recipe reformulation takes about nine months on average, according to a research note published Thursday from Bank of America Securities analyst Antoine Prevot.
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