Recent reports indicate that cocoa prices on a global scale have reached an unprecedented peak due to unfavourable weather conditions affecting crops in West Africa.
Cocoa prices soared to a record-breaking $5,874 (£4,655) per tonne on Thursday, marking a significant milestone in the New York commodities market.
The price of the main component used in chocolate production has nearly doubled since the beginning of last year.
The rising cost of cocoa is already impacting consumers and putting pressure on major chocolate manufacturers.
According to Hershey, there are concerns about the impact of cocoa prices on their earnings growth this year.
The company’s chief executive, Michele Buck, also mentioned the possibility of adjusting prices for customers.
“We are unable to discuss future pricing,” she stated during a call with analysts. However, she did mention that considering the current cocoa prices, we will be utilising all available strategies, including pricing, to effectively manage our business.”
The remarks were made as Hershey revealed its financial results for the three months ending on December 31st. The data revealed a decline in sales of 6.6% due to consumers reducing their spending on confectionary amidst rising inflation.
Last month, Mondelez, the company responsible for the Cadbury brand, acknowledged the increasing costs of ingredients as a significant challenge for the upcoming year.
According to the chief financial officer, Luca Zaramella, the company has experienced notable rises in the prices of cocoa and sugar.
In December, a UK consumer group reported that the cost of certain holiday chocolate assortments had increased by a minimum of 50% within a year.
In November, the inflation rate for UK supermarket food and drink saw a slight decrease to 8.3%. However, the price of chocolate experienced a much more significant increase at 15.3%.
The rise in cocoa prices can be attributed to the unfavourable harvests in West Africa, the main source of global supply.
The El Niño weather phenomenon has resulted in a decrease in rainfall in Ghana and Ivory Coast, the world’s two largest cocoa bean producers.
Warmer temperatures and changes in precipitation patterns resulting from climate change can also affect crop yields.
“Traders are expressing concerns over the potential for another year of low production, as the threat of El Niño looms over West Africa’s crops with its hot and dry weather,” commented Jack Scoville, an analyst at Price Futures Group.
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