Costly Easter Treats, Cocoa Prices Hit Record Highs Ahead Of Easter

This price surge in cocoa has led to a significant supply shortage, affecting major chocolate industry players like Hershey's and Cadbury maker Mondelez.

Harshita Das

Updated on: 22 March 2024 7:21 pm

Chocolate rabbits wait to be decorated at the Cocoatree chocolate shop, April 8, 2020, in Lonzee, Belgium. Photo: AP

Consumers gearing up for Easter festivities may find themselves shelling out more for their sweet indulgences this year as cocoa prices soar to unprecedented levels.

Cocoa Futures Surge

Cocoa futures have skyrocketed in 2024, nearly doubling since the beginning of the year. The surge is attributed to adverse weather conditions in West Africa, the region responsible for producing over 70% of the world's cocoa supply. Rising temperatures and weather-related stress have led to significant damage to cocoa crops, exacerbating the supply shortage.

In addition to cocoa, sugar prices are also climbing. Futures for a pound of sugar have seen an 8% increase in 2024, following a 2.7% rise in 2023.

Impact on Chocolate Industry

Major players in the chocolate industry, such as Hershey's and Cadbury maker Mondelez, have been forced to pass these escalating costs on to consumers. Despite efforts to maintain profit margins, both companies have witnessed a surge in net profit margins in recent years, reflecting the impact of price hikes on consumer wallets.

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BY Harshita Das

Consumer Spending Outlook

The National Retail Federation anticipates a decline in spending on Easter treats this year, although the overall figure remains substantial compared to historical averages. According to the federation's latest survey, consumers are expected to spend $3.1 billion on Easter candy in 2024, translating to approximately $24.78 per person. This marks a decrease from the $3.3 billion spent the previous year.

Industry Response

Mondelez, a prominent figure in the Easter chocolate market, has relied on price adjustments to offset the surge in cocoa prices. With a 13% share in the global chocolate market, the company has implemented price increases of up to 15% within its chocolate category in 2023. Looking ahead, Mondelez anticipates further price adjustments to support revenue growth forecasts of up to 5% in 2024.

"Pricing is clearly a key component of this plan," noted Luca Zaramella, chief financial officer at Mondelez, emphasizing the role of pricing strategies in navigating the challenging market conditions.