The sudden and sharp rise in cocoa prices this year is taking a toll on chocolate stocks across the world as investors scramble to assess the impact that confectionery companies could face if costs of the key ingredient remain elevated.
Chocolate-related stocks around the globe are already feeling the heat. Switzerland’s Nestle, Cadbury and Milka chocolates maker Mondelez International Inc., and Barry Callebaut AG, the world’s largest producer of bulk chocolate, have all declined this year. Bad weather and disease have hurt the cocoa crop in West Africa, where most of the commodity is grown. Additionally, underpaid farmers in the Ivory Coast and Ghana lack the incentive to expand their output and new European Union regulations stand to add to costs for manufacturers.