The confectionery industry is facing challenges in the form of high cocoa prices and limited availability. Despite having fixed-price long-term contracts, large manufacturers are still at risk due to the volatility of the cocoa market. Nestlé CEO Ulf Schneider has noted that his company is largely protected from current price fluctuations, but other companies may resort to recipe changes or quantity reductions to mask any increases.
Cocoa prices have reached historic highs, benefiting farmers in countries like Ecuador who have seen significant increases in their earnings. However, major cocoa processing companies based outside of cocoa-producing countries are also feeling the impact due to scarcity of raw materials. Some companies have had to dip into reserves to meet demand.
Raw materials expert Steve Wateridge highlights the role of smugglers in exploiting price differentials between cocoa-producing countries. By purchasing beans at lower prices and selling them at a premium in other markets, smugglers are able to profit from the volatile cocoa market. Despite these challenges, the industry is adapting to ensure the continued availability of chocolate products.
