“The demand issues are multifold,” said Judy Ganes, president of consultancy J. Ganes Consulting, who has followed the market for more than 30 years. “There’s not just cocoa prices that are high, but sugar prices are also high, and manufacturers always look for ways to meet margins and work to put fewer chocolate chips in a cookie, or they shrink the bar sizes.”
Factories usually process cocoa several months before products are turned into chocolate. That means the slowdown likely signals the industry is expecting less demand ahead. Barry Callebaut AG, the world’s largest maker of bulk chocolate, said earlier this month that its sales volume fell 2.7% in the first nine months of the year, with its gourmet and specialists’ business seeing the biggest drop.
The sweet tooth of the emerging middle class has allowed companies like Nestle, Chocoladefabriken Lindt & Sprungli AG and Hershey thrive, while simultaneously feeding a diabetes epidemic which has created of the most reliable streams of cashflow in any market. It’s truly a sign of consumer pressure when demand for an addictive product like chocolate declines.Click HERE to subscribe to Fuller Treacy Money Back to top