Why your Valentine’s chocolate is getting more expensive

There are several reasons for cocoa’s melt-up. Bad weather and plant diseases have wrecked crops in West Africa’s growing regions, where aging cacao trees are becoming less productive. Meanwhile, a European Union deforestation law and low returns for growers have limited the planting of new groves. The extent of the supply issues means that prices are unlikely to return soon to the levels chocolate makers and consumers have been accustomed to paying, analysts say.

“The price of a ton of cocoa butter is practically the price of a small car," said Judy Ganes, of J. Ganes Consulting, an agriculture commodity analysis firm.

After cocoa prices reached a record high last year, analysts forecast stronger output during 2025. But a string of dry months has disappointed chocolate sellers, setting up the industry for a fourth consecutive year of supply shortfalls. Prices have eased slightly since their December peak after weather conditions in Africa improved; but because it takes years to grow a new cacao tree, the problem takes ample time to fix.

The pressure has flowed through the supply chain, taking a bite out of Hershey’s earnings and jolting smaller chocolatiers. At Roni-Sue’s Chocolates, a bright-red storefront tucked into the edge of New York City’s Chinatown, owner Rhonda Kave just raised the price of her chocolates for the first time in years and stabilized her business by offering chocolate-making classes.

“People really aren’t balking about it," Kave said. “It was a modest increase, and it was necessary." Plus, she thinks her customers are willing to pay a premium for high-quality chocolate. “When people taste the good stuff, they don’t want to go back."

The world’s biggest chocolate makers, like Hershey and Mondelēz International, said their prices are rising much more slowly than the price of cocoa, and they prefer taking a hit to profits over a blow to demand. Mondelēz Chief Executive Dirk Van de Put told investors recently that the company needed to maintain its price thresholds “so that consumers can continue to enjoy their chocolate," adding that cocoa prices would “eventually" come down.

Many trees in West Africa have died due to cacao swollen-shoot virus, which causes root necrosis. And due to the industry’s reliance on the region, a few months of dry weather can tank the season’s harvest and prolong the high prices.

Some analysts said that to shore up supply, the industry should invest in production outside West Africa. But shifting cocoa’s center of output is easier said than done. In an industry like corn, farmers can respond to a weak harvest by planting more the next year. But cacao trees take years to grow. Farmers can respond to drought by adding external water sources to trees, but doing so doesn’t help the tree until the following year’s harvest.

Hershey Chief Executive Michele Buck told shareholders last week that production was on the rise in regions outside West Africa, saying “we continue to feel good about what we’re seeing in the market fundamentals."

True relief still appears some distance away. While the Ivory Coast and Ghana’s market share dropped to around 50% during the last growing season, that change was mostly driven by plummeting supply in Africa, not a substantial rise in output outside the continent. Chocolate manufacturers promised last summer that this year’s harvest would be fruitful, Jefferies analysts noted, but the early signs are grim.

Another potential route to lower costs, the analysts noted: a fall in demand. When a consumer stares down a pricey, 2-pound box of premium truffles this week, Ganes said, they might pick the 1-pound box instead—or choose another Valentine’s Day gift.

“They might go back to the expensive roses," she said.

Write to Owen Tucker-Smith at Owen.Tucker-Smith@wsj.com