Penguins made with chocolate during the “Festichoc” chocolate festival in Versoix, near Geneva, March 16, 2024 (AFP/Fabrice COFFRINI)
Cocoa at $10,000 per ton just before Easter; the bean is bitter for Swiss chocolatiers who are faced with a tough choice: increase prices at the risk of cutting consumers’ appetites or let their margins melt.
On Tuesday, cocoa briefly crossed the $10,000 per tonne mark for the very first time in New York. That’s more than triple what it was a year ago.
A violent outbreak which will force chocolate makers to further increase their prices, even if their room for maneuver is limited with the drop in morale among households, already exhausted by inflation.
Already at the beginning of March, Lindt & Sprüngli had warned that its prices would increase again in 2024 and 2025 after having already been raised by 10.1% on average in 2023, the group focusing on its higher margin products, such as pralines or Easter bunnies, to absorb the shock.
Workers collect dry cocoa beans in front of a cooperative in the village of Hermankono, November 14, 2023, Ivory Coast (AFP/Archives/Sia KAMBOU)
The surge in cocoa, which adds to the high prices of sugar, “intensifies the challenges for Swiss chocolate”, Thomas Juch, director of public affairs at Chocosuisse, the sector’s employers’ federation, told AFP.
This surge in cocoa occurs in a “context of increased price sensitivity” on the part of consumers and is for the moment partly “the responsibility of manufacturers” who “cannot fully pass on this increase in sales prices retail”, since they are adjusted at certain intervals during negotiations with supermarkets, “and not continuously”, he emphasizes.
In 2023, the drop in consumer morale weighed on Swiss chocolate export volumes, down 0.2% to 150,516 tonnes, and per capita consumption in Switzerland, the leading chocolate consuming country in the world, increased. decreased by 1%, to 10.9 kg, according to Chocosuisse.
But since January, cocoa prices have more than doubled following poor harvests in Ivory Coast and Ghana, the world’s leading bean producers, due to heavy rains and pod disease, then d ‘an episode of drought.
With this new record on Tuesday, “+shrinkflation+ (reduflation, Editor’s note) could lead to a reduction in the size of chocolate bars”, reacted Ole Hansen, head of raw materials at Saxo Bank, in a market commentary.
– “Sacred Recipes”-
One solution when raw material costs explode is to reformulate recipes.
Chocolate eggs on display in one of French chef Alain Ducasse’s chocolate factories, on March 13, 2024 in Paris (AFP/Archives/Guillaume BAPTISTE)
But “tweaking recipes and taste profiles now, just because cocoa costs have increased, would in my opinion be a mistake,” said Nestlé boss Mark Schneider, during the group’s annual results, with consumers having expectations very precise for their favorite products.
“Recipes are sacred,” insists Jessica Herschkowitz, communications manager for the family business Camille Bloch.
Another option is to create new products, the Ragusa brand being a well-known historical example in Switzerland. In 1942, Camille Bloch, who was struggling to import beans into Switzerland in the face of the disruption of international trade during the Second World War, invented this hazelnut praline bar, which he had in abundance, creating what has since become a brand worship.
– No other options –
But in the immediate future, “we will have to go through the price increase box like all the other chocolatiers”, recognizes Ms. Herschkowitz, even if the company has “done everything” to avoid it. The rise in cocoa prices is such that “we have no other options”, she explained to AFP.
According to Jean-Philippe Bertschy, analyst at Vontobel, “even if certain foreign groups are less careful”, Swiss chocolatiers cannot compromise on quality. Lindt, for example, “makes no compromise” because “quality is the basis of its success”, he told AFP.
For Adalbert Lechner, the boss of Lindt & Sprüngli, the solution is rather to ensure that it has a sufficiently wide price range so that its products are accessible “to all budgets”, like its Easter bunny, available in six sizes, ranging from 10 grams to 1 kilo, he took as an example during the group’s annual results.
© 2024 AFP
Did you like this article ? Share it with your friends using the buttons below.
