Fazer seeks alternatives as cocoa prices soar
Economy

Rising Cocoa Prices: How Chocolate Manufacturers are Adapting to Climate-Induced Uncertainty in the Industry

In recent years, the cocoa industry in Africa has been hit hard by heavy rains followed by drought, which has devastated cocoa crops and impacted prices globally. The price of cocoa has surged recently, leading chocolate manufacturers to seek alternative raw materials and raise prices in countries like Finland.

Cocoa futures prices have risen by 60% in New York this month and have more than doubled this year, with the main reason being adverse weather conditions in Ghana and Ivory Coast. The El Niño weather phenomenon has brought heavy rains to the region, exposing cocoa trees to diseases and causing the beans to rot on the trees. This has been followed by exceptionally dry conditions, impacting cocoa production. Climate change exacerbates these challenges faced by cocoa growers, with the El Niño phenomenon becoming stronger.

To respond to rising cocoa prices, chocolate manufacturers have implemented various strategies. Some have increased prices while others have reduced the size of their products without changing the price. Finnish company Fazer has also raised prices due to the cocoa price hike and is exploring alternative raw materials to replace cocoa. Fazer is researching potential substitutes for cocoa and experimenting with cereal-based chocolate bars while aiming to maintain product quality. They are also looking at cost-saving measures as they prepare for various future scenarios as they navigate the challenges posed by the cocoa price increase.

Despite efforts to mitigate the impact of rising cocoa prices, uncertainty remains in the industry as operators monitor autumn harvest supply availability. High cocoa prices may eventually be passed on to consumers, affecting their purchasing decisions. As the industry grapples with ongoing challenges, innovative solutions are needed to adapt to changing landscape.

In conclusion, adverse weather conditions such as heavy rains followed by drought have led to a surge in the price of cocoa globally due to its devestating effects on crops in Africa’s largest producers Ghana and Ivory Coast. Chocolate manufacturers are responding differently from increasing prices to reducing product sizes without changing their costs but some companies like Fazer are exploring alternative raw materials such as cereal-based chocolate bars while maintaining quality standards.

As uncertainty continues in this industry, it is important for operators and stakeholders alike to find innovative solutions that will help adapt them

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