Chocoholics better stock up on their favorite treat now because record high prices for cocoa butter are set to make chocolate prices go through the roof this winter, according to Reuters.
For the second year in a row record demand for chocolate has caused bean supplies to become scarce. Demand for beans in the next 12 months is expected to exceed the supply of beans by 129,000 metric tons according to the London-based Complete Commodity Solutions Ltd. Chocolate sales are expected to rise 6.2 percent next year while chocolate producers will bring in a $117 billion, according to Bloomberg.
"The reports that we've seen in the U.S. show that for the first time in quite a while, the consumer data looks positive," Kip Walk, corporate director of cocoa and sustainability at Blommer Chocolate Co., told Bloomberg. I'd say that seeing the rapid increase in butter rations over the past year or so would underscore the fact that demand for chocolate products would be on the increase."
Asia's exploding middle class now has money to spend and a bit of a sweet tooth as they are thought to be part of the reason for the increase in demand. Six months ago butter prices were $4,000 per ton; now they have risen to $7,000 per ton, according to Reuters.
"We have increased our chocolate prices by 30 to 40 percent since January and most of customers are not happy about it," Richard Lee, CEO of Singapore based Aalst Chocolate, told Reuters. "With the festive season just around the corner, the price of (cocoa butter) will rise even further and surely hit the bottom line of chocolate makers."
Some of the largest chocolate producers book their butter months in advance so they won't pay the extraordinarily high prices as they increase input for the upcoming holidays that have high demand for chocolate; Christmas, Valentine's Day and Easter, Reuters reports.
"Trying to find uncommitted, accessible large volumes of butter that's available from now through December, it's problematic," Jeff Rasinski, corporate director of procurement for Blommer Chocolate Co., told Reuters.
Unless prices increase to an astronomical level demand for chocolate is unlikely to lessen any time soon. Frank Day, vice president of commodity operations for the Hershey Company, told Bloomberg that the industry is going to have to find a way to produce more beans to accommodate the growing hunger for chocolate.
"The Hershey Company is very optimistic about demand growth around the world and in emerging markets," Day said. "To meet this demand growth the origin countries will have to modernize cocoa and increase production. That will be good for the cocoa farmer."
If the price of cocoa butter keeps rising soon the little chocolate coins traditionally won in games of dreidel will be worth more than the actual gold coins they are modeled after.
