In the past few years, the cocoa sector has faced several challenges, driving the global supply of cocoa down. In April of 2024, prices reached a historic high in the market, then in January 2025, they soared even higher. Climate-change induced droughts has declined yields in many cocoa producing countries, and increased disease has discouraged investors from investing into cocoa farms. Let’s investigate the chocolate melt-down happening worldwide and see why the price-point of your Valentine’s Day chocolate is a bit more expensive than usual.
What has happened to the prices?
Over the past year, global cocoa prices have experienced significant volatility, reaching unexpected highs before any bit of a decline. In 2024, prices soared to record levels, with futures contracts peaking at almost $10,000 USD per metric ton in late March and early April. More recently, global cocoa prices yet again hit a record price, soaring just over $10,000 USD per metric ton in late January. This was a drastic increase to what prices were in late 2022 and 2023, which averaged between $2500 USD/T to $4500 USD/T.
Month | Cocoa Prices (USD/T) |
|---|---|
October 2022 | $2,424 |
May 2023 | $3,000 |
November 2023 | $4,303 |
April 2024 | $9,795 |
November 2024 | $7,454 |
February 2025 | $9,927 |
From Droughts to Demand: Unpacking the Cocoa Price Hike
Lately, cocoa prices have skyrocketed, and there are a few main reasons behind this. First, cocoa production has taken a hit due to bad weather and diseases affecting crops, especially in West Africa, which produces 60% of the world cocoa supply. Droughts and plant diseases have caused a drop in the number of cocoa beans being harvested, which has led to a tighter supply. On top of that, the global demand for chocolate continues to grow, especially in countries where people are consuming more sweets, like Switzerland, Germany and Ireland. Weather-related challenges and disease outbreaks have discouraged investors from putting money into cocoa farms. Additionally, the aging workforce on these farms is a significant concern, as younger generations are increasingly uninterested in cocoa farming, resulting in a labor shortage. These factors have hindered farms’ ability to meet demand and boost productivity. Because of this, the cocoa sector has become less appealing to investors, which only exacerbates supply shortages and drives up prices.
The shortage of supply and increased prices have also created challenges for chocolate manufactures, such as Hershey and Cadbury, who face higher costs that may be passed onto consumers. Both Hershey and Cadbury projected a 10% drop in their adjusted profit for 2025, which is higher than analysts’ estimates of a 6.7% decline. Both companies have been pushed to raise product prices, which has forced cost-conscious consumers to opt for more affordable chocolate alternatives. Until the supply issues are resolved, cocoa prices are likely to stay high, although they may fluctuate.
Bean Hoarding
Another issue in the global cocoa supply is the practice of “bean hoarding”. When faced with fluctuating prices or market uncertainty, farmers and traders sometimes hold on to their cocoa beans rather than selling them immediately. This practice can occur when they anticipate that prices will rise, leading to supply shortages in the market. It’s also a response to market instability, where cocoa farmers may choose to stockpile their beans as a form of economic security. Hoarding can worsen supply chain disruptions, particularly if large quantities of beans are withheld from the market, further driving up prices and contributing to supply shortages. However, this practice is not universal and depends on various factors, including local market conditions, global pricing trends, and the financial situation of the farmers involved.
Looking Forward: Impact on Consumers?
The rising global cocoa prices, although concerning to chocolate manufacturers, may also have an impact on the price of your favourite chocolate bar. There will be several impacts on consumers:
Higher Prices for Chocolate Products
The most direct impact is on the cost of chocolate and cocoa-based products. As cocoa prices rise, manufacturers pass those increased costs onto consumers, leading to higher prices for chocolate bars, cocoa powder, and other related goods.
Inflationary Pressure on Related Goods
Cocoa is a key ingredient in many food and beverage items, not just chocolate. As cocoa prices rise, the cost of other products like confectionery, ice cream, and even some beverages may also increase. This can contribute to broader inflation in the food sector, affecting household budgets.
Potential for Decreased Product Quality or Size
To cope with rising cocoa costs, some manufacturers might reduce the quality of ingredients or slightly shrink the size of their products (a practice known as "shrinkflation"). This could mean consumers get less for the same price, impacting their overall experience and value.
Shift to Alternative Products
As cocoa becomes more expensive, some consumers may seek cheaper alternatives, such as products containing less cocoa or substituting with other flavors. This could drive demand for alternative sweets or snacks, which might not have the same cultural or flavor appeal as traditional chocolate.
What Goes up Must Come Down
Although cocoa prices are at an all-time high, recent data has indicated a downward trend in cocoa prices. As of early February, cocoa prices have decreased by approximately 4.3% since January. Despite this decline, prices remain highly elevated compared to historical levels, and the market continues to experience volatility due to ongoing supply challenges and the firm demand.
So, don’t fret if your Valentine’s Day chocolates are a bit more expensive this year, the sweet treat prices will hopefully be on their decline in the next few months.
SAIFood Introduces Kate
While this is not Kate’s first blog on SAIFood, but this is her official first post as a SAIFood Regular Blogger. Kate has been apart of Dr. Smyth’s research team since the fall of 2023, as a Masters Graduate student (full bio down below). Not only has she been working on her thesis research, she has been helping out with teaching undergrad courses and assisting with research on top of her Masters. She is a joy to work with and offers a great new lens to add to SAIFood.
We are so proud for her and her accomplishments! So what better way for us to step into our 10th year of blogging then with the words of a bright young women, we know we will be hearing a lot of great things about Kate in the years to come, and hopefully they will also be on SAIFood!
