Chocolate lovers struggle to find a sweet spot amid rising prices

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Central bankers around the world say inflation is under control, but life is not so sweet for chocolate lovers, with the price of beloved treats such as Freddo frogs continuing to rise as confectionery companies pass on rising cocoa prices to consumers .

Mondelez-owned Cadbury Australia has doubled the price of two of its most popular chocolate products after cocoa futures doubled to record highs this year due to volatile weather and disease.

The price of a Freddo frog – which was first created in 1930 and is one of Australia’s most enduring culinary creations – would double to $2 (£1), the company said, citing cocoa prices as the reason for the increase recommended. Retail price. The increase will also apply to Caramello Koalas.

“Due to the record global cocoa price and increased input costs, we have adjusted the RRP (recommended retail price) from $1 to $2, the first price change in over a decade,” Cadbury Australia said in a statement posted on social media. channels on Friday.

About 90 million anthropomorphic chocolate frogs, which come in a variety of flavors, are eaten in Australia each year.

“Freddo frogs are as Australian as Vegemite or Fosters. This will upset every blue-collar Australian, from the strugglers to the blue-ribbon suburbs,” said Tim Harcourt, chief economist at the Institute of Public Policy and Governance at the University of Technology Sydney.

In the UK, Freddo frogs have become an unofficial indicator of the rising cost of living, with consumers comparing each new price rise to the original 10p price. In 2022, the treat cost up to R50, but dropped to R30 in supermarkets, including Sainsbury’s.

Belgian Biscoff maker Lotus Bakeries said on Friday that commodity prices and other input costs had stabilised, except for cocoa.

Rising energy prices and supply chain disruptions following Russia’s 2022 invasion of Ukraine have pushed up the price of commodities such as grain, sugar and meat.

Prices have since fallen to pre-war levels and central banks have signaled that global inflation is under control. The Bank of England and the European Central Bank cut interest rates, while the Federal Reserve is expected to cut them in September.

However, volatile weather and, in some cases, trade tariffs have pushed up the prices of some commodities, even as core food inflation eases.

Cocoa futures in New York and London rose to record highs this year, with prices in New York surpassing $12,000 a tonne in April as bad weather and disease ravaged crops in Ghana and Ivory Coast, where two third of the world’s cocoa beans.

Chocolate makers such as Mondelez, Nestlé, Lindt and Hershey have been hit by higher prices.

Hershey cut its annual profit guidance on second-quarter earnings last week after reporting a 17 percent drop in sales. The company raised prices as a result of the cocoa boom, but inflation-stricken consumers cut back on chocolate consumption as a result.

In July, Cadbury’s owner, snack giant Mondelez, missed second-quarter revenue expectations as consumers switched to cheaper snacks. Chief executive Dirk Van de Put said consumers are still buying chocolate. “Chocolate remains a great category. It continues to rise with volume resistance and despite rising prices,” he said.

Swiss chocolatier Lindt also continued to raise prices without much impact on demand. Chocolate volume sold in the first half of the year was flat, but revenues rose 7% and margins a record 13.5%.

Better weather in West Africa in recent weeks has given rise to hopes of a recovery in supply, driving prices lower. Cocoa traded in New York fell below $7,000 a tonne this week, although that is still about double the price at the same time last year.

With the disease spreading in Ghana’s cocoa-growing regions, some in the industry fear that hopes for a recovery in global supplies are overblown. Another year of shortages would compound the problems facing chocolate makers.

Commodity prices are passed on to consumers with a time lag, as companies such as Mondelez buy cocoa up to a year in advance, rather than on the spot market. Therefore, price cuts are not reflected in supermarket prices until the following year.