Americans are already paying more for chocolate products as the cost of cocoa surges, and that isn’t likely to change throughout the rest of 2024.
Cocoa prices are nearly 65% higher than they were one year ago, and New York futures prices have hit a 46-year high. According to new research by CoBank, cocoa prices are likely to remain elevated until a new African crop comes to market late this year.
Additional price hikes for chocolate confections throughout the year appear imminent, and any rebound in consumer engagement with the category seems unlikely.
“The cocoa issues come at a particularly challenging time for manufacturers, considering the increase in sugar prices they’ve been coping with over the past three years,” said Billy Roberts, senior food and beverage economist for CoBank, a cooperative bank that serves rural America.
“While sugar prices have recently retreated, the prices of cocoa futures remain near record levels and show little sign of any significant movement,” he added. “That could lead to a further erosion of chocolate volume sales and begin to impact dollar sales, as well.”
Reuters reported global cocoa prices hit record highs on Feb. 8 as traders continued to scramble for supplies. Due to higher costs, additional price hikes for chocolate confections are likely throughout 2024, according to a statement from Advantage Solutions.
Dollar sales of chocolate confections grew in 2023 due to manufacturer price increases. Data from Circana showed that, for the 52 weeks ending Dec. 17, 2023, chocolate candy sales were 6.4% higher year-over-year and 15.3% ahead of two years ago. Those higher dollar returns occurred during a notable decline in volume sales, however, which fell 5% on the year.
Recent findings from the National Confectioners Association revealed that 74% of U.S. consumers consider confectionery items affordable treats. However:
45% of consumers have implemented money-saving measures when it comes to buying candy, such as switching types, brands, pack sizes, or retailers.
Despite a slight increase in global cocoa production in 2022-23, the International Cocoa Organization projects a global inventory decline of 146,000 tons. Cocoa production in west Africa – which accounts for nearly 70% of U.S. supplies – remains below estimates.
Roberts said tighter cocoa supplies and higher retail prices for chocolate in the U.S. will take a greater toll on sales throughout 2024.
“We’re anticipating single digit declines in both dollar and unit sales until pricing stabilizes and consumer discretionary incomes rebound,” he said.
