Chocolate lovers beware: Cocoa prices near record highs

David Gura Oct 29, 2013
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Chocolate lovers beware: Cocoa prices near record highs

David Gura Oct 29, 2013
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Halloween is just a few days away, and for many of us, that holiday affords us the opportunity to eat more than our fair share of chocolate. 

Well, the price of cocoa, one of the main ingredients in chocolate, is at an historic high, and while that won’t affect trick-or-treating this year, next year could be different.

This is a supply issue. Most cocoa is grown in West Africa, which is a part of the world that’s had some bad weather lately.

“Right now, it’s the cocoa processors who are taking the hit,” says Kona Haque, the head of commodity research at Macquarie. She bets we’ll see higher chocolate prices around Easter.

Now remember, a chocolate bar is made of more than just cocoa.

“Significant increases or decreases in one particular commodity don’t necessarily drive a change in the price of the end product for consumers,” says Erin Lash, an analyst with Morningstar. “It takes time to flow through.”

Chocolate makers don’t like to raise prices, especially when the economy is sluggish. Lash says they have other options, such as “shrinking the size of the product or adjusting the composition so that you’re using less of that particular raw material that maybe has skyrocketed.”

And if there are price increases, we probably won’t see them overnight. Lash says Hershey announced a hike back in March of 2011, and that took almost a year to implement.

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