This past year has been somewhat of a sour one in the world of sweets. Halloween candy prices increased by a whopping 13% in 2023 amid skyrocketing sugar costs and a massive sugar shortage. Now, American consumers may have to contend with even more price increases for another wildly popular confection: chocolate.
CoBank, a cooperative bank that provides financial services to several industries in rural America, revealed in a new report that price hikes for chocolate "are likely" in 2024. The reason? Cocoa prices have surged to nearly 65% higher than they were a year ago, and manufacturers are expected to roll out additional price increases to offset those elevated costs.
Any price hikes in 2024 would be in addition to a 7.2% surge in chocolate prices in the United States over the past two years, according to CoBank, which cited data from the consumer researcher Eurobank International.
The price increases seem to be having a mixed effect on chocolate sales. Because chocolate has gotten more expensive, total sales of the confection increased in 2023. However, the actual volume of chocolate sold has decreased by 5% in the past year and by 9.5% in the past two years, according to CoBank. Just this week, Hershey announced plans to cut some jobs as it anticipates that the soaring cocoa prices will limit its earnings growth in 2024.
CoBank believes that chocolate volume sales could decrease even more moving forward, while dollar sales could even start to decline because of the elevated prices.
"The cocoa issues come at a particularly challenging time for manufacturers, considering the increase in sugar prices they've been coping with over the past three years," Billy Roberts, senior food and beverage economist for CoBank, said in a statement. "While sugar prices have recently retreated, cocoa futures prices remain near record levels and show little sign of any significant movement. That could lead to a further erosion of chocolate volume sales and begin to impact dollar sales as well."
The rise in cocoa prices is connected to heavy rains and disease that negatively impacted the cocoa crop in West Africa, which grows about 70% of the world's cocoa, Agriculture Dive reported. For example, the West African country Ghana was projected to produce its lowest cocoa output in 13 years over the summer of 2023, per Bloomberg. CoBank believes that cocoa prices will remain high until a new African cocoa crop hits the market in late 2024.
Until then, consumers shouldn't be too surprised if they find themselves paying even more for their favorite chocolates at the grocery store.