Chocoholics beware! Chocolates, ice creams and cakes to get expensive as cocoa prices skyrocket (WATCH)

In the realm of chocolates and ice creams, a harsh reality is unfolding as the steep ascent of cocoa prices starts to impact the profits of key players. Cocoa prices have skyrocketed in recent months, reaching historical highs of nearly $10,000 per metric ton in March 2024, significantly impacting chocolate and ice cream brands worldwide.

The unprecedented increase in cocoa prices can be attributed to a global cocoa shortage, mainly driven by climate change-induced drought ravaging crops in West Africa. This region contributes around 80% of the world's cocoa output. Cocoa growers, who produce a high-value commodity, often receive a low share of the value chain, leading to low replanting rates and ageing cocoa trees.

The impact of higher cocoa costs is palpable across the industry, with chocolate and ice cream brands facing tough decisions. Many companies are considering passing on the burden to consumers through price hikes to maintain profitability.

Amul, a significant player in the chocolate market, is feeling the pinch. Managing Director Jayen Mehta revealed that cocoa prices in India have skyrocketed to Rs 800 per kg from its previous range of Rs 150-250. As a result, Amul is contemplating a significant price hike for its chocolate products, projecting an increase of 10-20% within the next two months.

Similarly, Baskin Robbins, a popular ice cream brand, is grappling with the challenge of rising cocoa prices. CEO Mohit Khattar disclosed that cocoa-based ingredient prices have surged by 70-80%. While the company has opted to absorb these increased costs for now, the situation will be reassessed post-summer season.

Havmor Ice Cream, which had already adjusted prices earlier in the year to offset inflation, is also strategizing to mitigate the impact of cocoa price hikes. Managing Director Komal Anand highlighted the sensitivity of the ice cream market to pricing changes. The company had proactively secured long-term pricing contracts in anticipation of such challenges, aiming to maintain current price levels despite the cocoa cost surge.

As cocoa prices continue to climb, chocolate and ice cream brands are navigating a delicate balancing act between maintaining profitability and retaining consumer loyalty. The decisions made by industry leaders like Amul, Baskin Robbins, and Havmor will likely shape the pricing dynamics in the coming months, impacting consumer choices in the chocolate and ice cream aisles. Chocoholics must prepare for the possibility of paying higher prices for their favorite treats as the cocoa crisis unfolds.