Canadians might have to pay more for chocolate and candies this Easter as manufacturers feel the crunch of high cocoa prices, which peaked earlier this month.
Cocoa futures have more than doubled over the past year. Global prices hit a record high right before Valentine’s Day, with cocoa futures trading at US$6 (C$8.10) per kilogram, according to the Intercontinental Exchange (ICE). A year ago, a kilogram of cocoa cost US$2.70 (C$3.70).
The soaring costs of a key ingredient of chocolates have the world’s biggest candy makers, like Hershey’s and Cadbury, already eyeing more price hikes.
Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, said cocoa futures have been pricey for a while, but the climb in the last month has been “incredibly spectacular.”
This is mainly due to a lack of production amid climate challenges in cocoa producing countries, especially Ivory Coast. That does not bode well for chocolate lovers.
“Over the next several months, we are expecting chocolate prices to be impacted at retail,” Charlebois said in an interview with Global News.
“Now whether or not we’re expecting chocolate at Easter to be impacted is unclear.”
Milk chocolate prices might be impacted less than dark chocolate, which has a high content of cocoa, he added.
Meanwhile, the price of sugar, another key ingredient in chocolate, has also gone up.
According to the latest inflation data from Statistics Canada published Tuesday, the price of sugar and confectionary increased by 9.3 per cent last month compared with a year ago. However, that was a slower price growth than the 9.6 per cent recorded in December 2023.
“In Canada, a lot of products for Easter, for example, would include both cocoa and sugar, and so that’s why there’s a bit of a double whammy right now affecting candy makers and chocolate makers as well,” Charlebois said.
‘Skimpflation’
In addition to price hikes, chocolate manufactures may also resort to some other strategies to offset the cocoa cost pressures.
“Skimpflation” is among those options. That is when manufacturers reformulate their products by replacing an ingredient with another that is cheaper, Charlebois said. In that case, the quality of the product may be compromised.
“We’re expecting more skimpflation cases this year as a result of higher sugar prices and higher cocoa prices as well,” Charlebois said.
There are also artificial flavours to mimic the taste of chocolate, he added.
Another possibility is “shrinkflation” when the product gets smaller, but the price remains the same.
For Easter, that may mean the chocolate eggs or bunnies could get smaller in size.
“They’re already quite small, so I don’t know how small you want to get, but that is a possibility that we could see for Easter and beyond,” Charlebois said.
Since the peak on Feb. 13, cocoa prices have plateaued and slightly dipped. Cocoa futures were trading at US$5.97 (C$8.00) per kilogram, as of 1:29 p.m. ET Wednesday.
It is expected that prices will drop over the next month or so as production stabilizes, Charlebois said.
— with files from Reuters