“It’s a ‘black crisis’ for the chocolate world

In 2024, for many customers, the Easter ‘surprise’ was the significantly increased cost of chocolate eggs.

Simply taking a stroll through the supermarket aisles was enough to notice the difference compared to previous years.

But this trend obviously doesn’t stem from chocolatiers suddenly wanting to ‘enrich‘ themselves at the expense of consumers during a festive occasion where the egg is the flagship product, indispensable for many families.

On the contrary, at the root of this sudden phenomenon lies a purely logistical explanation.

SKYROCKETING COSTS

Simply put, in recent months, the wholesale cost of cocoa supplies – a fundamental ingredient for making chocolate – has skyrocketed.

There’s no other way to describe a 400% increase that has pushed this indispensable raw material to ‘record’ figures never seen before.

To better contextualize the issue, it’s enough to say that currently, one ton of cocoa costs over $10,000 on the market – compared to about $2,000 in more normal times.

These costs inevitably get ‘spread’ throughout the entire supply chain until they reach the final product – and the customers’ pockets.

But how did we arrive at such a situation for a ‘simple’ commodity that we all tend to take relatively for granted?

EXPORTS IN CRISIS

The big problem is that the cocoa raw material is mainly exported from two countries: Ghana and Ivory Coast are responsible for about 60% of the world’s cocoa supplies.

But due to a series of exceptional circumstances, both have recently been hit by severely limited productions: unfavorable weather conditions this year have been compounded by a series of plant diseases that have devastated crops and thus heavily influenced yields.

At the first signs of scarcity, chocolate producers naturally rushed to secure the limited raw materials available, thus ensuring production continuity.

And consequently, this triggered price increases due to the immutable laws of supply and demand.

But what further exacerbated all this was speculation by economic entities buying raw materials not for production needs but simply to resell them later at a higher price.

The result is what we’re seeing: analysts are calling it the ‘biggest cocoa shortage in the last 60 years,’ with a deficit of over 370,000 tons just for 2024.

COMPANY ISSUES

This particular confluence has created upheaval throughout the entire confectionery industry, to the point of heavily impacting the businesses of the major companies involved.

For example, the shares of Hershey and Nestlé (two of the world’s largest chocolate giants) have dropped by 22% and 13% respectively in recent months.

For this year, producers have tried to address the market crisis as best they could.

For instance, some chose to reduce the size of their eggs to offer a price to the customer that wasn’t ‘exorbitant.’

It’s that phenomenon Anglophones call ‘shrinkflation,’ the combination of ‘shrink’ and ‘inflation.’ When a product simultaneously increases in cost and decreases in quantity.

(Exactly the same mechanism that led some pasta manufacturers, at the height of the Ukraine crisis and with wheat prices soaring, to introduce 400-gram packs instead of the traditional 500.)

But obviously, this is an insufficient and temporary solution to a problem that risks assuming structural traits.

While plant diseases may be a phenomenon that won’t recur every year, the climatic conditions of the producing countries seem to be undergoing a long-term mutation phase – like the rest of the planet – which could jeopardize crops for years to come.

SUPPLY CHAIN SECURITY

It’s yet another demonstration of how just one unexpected event in the global supply chain can ‘block’ the gears of a mechanism absolutely fundamental for the well-being and security of our companies.

That’s why ‘securing’ the supply chain is today one of the foremost strategic missions for any company wishing to ensure operational continuity even in the face of global ‘shocks’ that – as we’ve unfortunately seen with an abundance of examples in recent years – continue to occur punctually.

That’s why at Logistics4You, we offer companies an excellent shipping service: to ensure anyone in need can securely ship and deliver their goods within 24 hours throughout Europe.

Ensuring the security and consistency of supplies – even in difficult or ’emergency’ conditions – is a fundamental task: indeed, when this security is lacking, the effects are felt and produce headlines, as is currently the case with the ‘crisis‘ of chocolate.

At any time and for any reason your company needs professional, ultra-fast, and guaranteed shipping, Logistics4You is the best strategic partner you can contact anytime: 24 hours a day, 365 days a year.”

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