Chocolate manufacturers resorting to ‘Skimpflation’ following rise in cocoa prices

Chocolate lovers may soon face higher prices at the checkout due to global production issues causing cocoa prices to soar in Australia.

A report by agricultural lender Rabobank highlights a global cocoa shortage resulting from poor harvests in West Africa, leading to price hikes in the chocolate industry.

The report predicts that chocolate prices will rise significantly in the coming months and into 2025, posing a major challenge for the sector already facing declining demand.

The main reason for this price increase is the production issues in Ivory Coast and Ghana, which together produce 70% of the world’s cocoa. High levels of plant disease and internal marketing systems are causing farmers to not receive the full commodity price.

With cocoa stocks at a 22-year low and commodity prices at their highest in nearly 50 years, producers and manufacturers are passing on the costs to consumers.

Rabobank’s analyst Paul Joules warns that the full impact of the cocoa crisis is yet to be seen on supermarket shelves globally.

Inflation costs for snacks and confectionery have already risen by 4.6% in the June quarter, with cumulative increases reaching 21.8%, according to the Australian Bureau of Statistics.

Joules anticipates the steepest price hikes in the second half of 2024 and beyond due to supply chain delays and existing contracts.

Chocolate manufacturers are grappling with soaring cocoa costs, leading to higher retail prices for consumers.

To cope with rising costs, manufacturers are resorting to shrinkflation and skimpflation, which may result in reduced package sizes and more fillers in chocolates.

Consumers are expected to switch between chocolate types and brands, including private label products, causing a significant drop in demand.

This cocoa price shock coincides with a consumer advocate Choice report finding minimal price differences between major supermarkets and the ACCC taking legal action against Coles and Woolworths for misleading specials.