Time to Get Ready for a Smaller Hershey Bar?

  • Share
  • Read Later
Andrew Harrer / Bloomberg / Getty Images

Just in time for Halloween, chocolate prices are expected to hit record highs.

The Wall Street Journal reports that one kilogram of chocolate will soon hit $12.25, an all-time high, and an increase of 45% compared to 2007.

Prices are rising thanks to a combination of heightened global demand and shrinking supply of the cocoa beans necessary to make chocolate—forces that have been in the works for quite some time. In February, Businessweek reported that farmers in West Africa, where 70% of the world’s cocoa is produced, were giving up on the crop because it has proved increasingly difficult to make profits, at least partly because of unreliable weather. A month later, a report in Reuters indicated that global cocoa prices could more than double by 2020 because of anticipations that production would not keep up with demand.

One of the prime factors to blame for increased demand for cocoa beans is the rising preference for dark chocolate. The making of dark chocolate typically requires more beans than milk chocolate, and data cited in the WSJ story notes that dark chocolate now constitutes about 20% of all chocolate bars, up from 18% in 2008. The demand for dark chocolate in Europe, especially in Switzerland, has risen even faster.

(MORE: Is Your Food Expired? Don’t Be So Quick to Toss It)

It’s not just that consumers suddenly began liking the taste of dark chocolate more. More people are also turning to the dark side because dark chocolate is perceived as being better, nutrition-wise, than milk chocolate:

“There’s a general trend toward the dark chocolate,” said Nicholas Fereday, a food-industry analyst at Rabobank. “The benefit of having the high cocoa content is having a lower sugar content and that’s what would appeal to calorie-counters.”

Studies also indicate that taking a little dose of dark chocolate daily lowers blood pressure, at least in the short-term.

But back to the big question: Will global trends mean that Americans stocking up for Halloween will see chocolate bars soaring in price, and/or decreasing in size in order to keep prices within reason? While Hershey raised prices 10% across the board in 2011 due to increasing costs for raw materials, transportation, and such, and food manufacturers regularly shrink products as stealthy price hikes—that’s what charging the same for less produce amounts to—it’s unclear if prices for goods from Hershey and the other chocolate giants will spike in the near future.

(MORE: 7 Signs the Craft Beer Craze Has Gone Totally Mainstream)

According to experts cited by the Chicago Sun Times, specialty chocolate producers and boutique chocolatiers are the ones that are especially likely to be forced into jacking up prices:

“The demand for cocoa butter from China and emerging markets is through the roof, giving cocoa butter producers pricing power,” said R.J. Towner, Director of Equity Research for Valuentum Securities, Inc. “Small players that don’t have the scale of Hershey’s or Cadbury will be forced to raise prices because cocoa butter is such a large input into chocolate.”

What’s more, trick-or-treaters may be upset to learn that the economy could make Halloween a little less sweet this year. The new National Retail Federation survey has it that the economy will affect Halloween spending for about one-quarter of consumers, and among those impacted, one-third say that they’ll be spending less on candy.

0 comments