Industry
Cocoa crisis: Chocoholics beware as prices surge & portions shrink
Summary
Both mass market producers as well as specialty chocolate makers face tough choices in India’s $2.2-billion chocolate market
NEW DELHI : Indulging in chocolates is a universal delight, with their irresistible allure sparking a sweet frenzy among enthusiasts. But amid this craze, a bitter reality looms: the possibility of chocolates becoming pricier, smaller, or less cocoa-rich if the cocoa prices continue to surge.
This dilemma has chocolate aficionados and confectionery makers, alike, on edge, as they grapple with the repercussions of record-high global cocoa prices earlier this week.
India imports a significant volume of the primary ingredient that goes into making chocolates. Global cocoa prices breached $10,000 per tonne on Tuesday, surging by over 100% in 2024 alone, due to a shortfall from key producers Ivory Coast and Ghana.
Regions in West Africa produce 70% of the world’s cocoa.
Experts said the sharp price escalation will hurt both mass market producers such as Nestle, Mondelez, Amul, ITC and Mars, which operate in India’s $2.2-billion chocolate market, as well as for specialty chocolate makers which source cocoa beans locally.
“There will be a significant correction in terms of the price because the raw material costs are high. We will naturally have to pass that on to consumers," said Devansh Ashar, co-founder and chief chocolate maker at Pascati.
Pascati works with Fair Trade Alliance Kerala to source its Malabar Hills-origin cacao—the pods from which cocoa is derived. The brand sells chocolate bars (75 grams) priced upwards of ₹280. It also sells cocoa butter and cocoa powder.
A spokesperson for Nestle India said the maker of Kit Kat chocolates is “monitoring the situation". Spokespersons for Mars and Mondelez declined to comment.
In 2022, India imported $82.5 million worth of cocoa beans, becoming the 17th largest importer of the ingredient in the world, according to the Observatory of Economic Complexity, an online data visualization and distribution platform.
Baksin Robbins, which sells several flavours of chocolate ice creams, is looking at ways to absorb costs and not hike prices immediately, especially not at the onset of the peak summer season.
“On the commodity front, while we’re navigating fluctuations in cocoa prices, fortunately dairy ingredient prices have been reasonably stable. Our call, therefore, is to hold prices for now and absorb fluctuations at least for the next couple of months before we reassess the situation based on prevailing ground realities," said Mohit Khattar, chief executive officer of Graviss Group, the parent company of Baskin Robbins.
Last week, packaged foods company Parle Products warned of the impact of escalating cocoa prices on its products.
“Cocoa prices are really under stress; their prices have shot up disproportionately. We have candies and biscuits where we use cocoa-based products, which will have some bearing," said Krishnarao Buddha, senior category head, Parle Products, adding that the company may take “need-based" pricing actions if required.
Other industry stakeholders said customers may face higher prices or reduced grammage or even lower cocoa content in their chocolates in the coming months.
Local prices of cocoa too have escalated, by 50% between November and now, in response to the global surge, said Ashar of Pascati. “It’s continuing to increase. These are very uncertain times and it will take another quarter for us to figure out what it settles at," he said.
A few, however, are hopeful, expecting cocoa prices to begin correcting in a few months.
“Cocoa price was hovering around $2,800 sometime last year—and now it has reached over $10,000 per tonne. We believe that this uncertainty around cocoa prices will exist for another four months, at least. After four months prices will really cool down but won’t go back to the $2,800 mark," said Nitin L. Chordia, a certified chocolate taster and founder of Cocoashala India.
India’s chocolate market typically operates at the mass end with wafer chocolates as well as at the more premium chocolate bar category. India has also seen the entry of several homegrown craft chocolate brands in recent years.
“My take is that chocolate and cacao derivative product prices are going to go up. Cocoa content in chocolates is going to come down, at least in industrial chocolate," said Chaitanya Muppala, founder, Manam Chocolate, a premium cacao pod-to-bean chocolate brand.
“There’s going to be an increased demand for craft chocolate," he said, “because people now know the value of cacao and they want to know where the cacao is being sourced from, how it was processed, and does it actually have cacao in it."
