(MENAFN- Swissinfo) Cocoa prices briefly crossed $10,000 (CHF9,058) per tonne on the futures market on Tuesday, an all-time record. Swiss chocolate makers can no longer avoid passing on the cost to consumers.
This content was published on March 27, 2024 - 17:06 3 minutes
Swissinfo's India specialist covers a wide range of issues from bilateral relations to Bollywood. He also knows a thing or two about Swiss watchmaking and is partial to the French-speaking part of Switzerland.
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Poor weather and disease in Ivory Coast and Ghana have led to a deficit in cocoa beans for the third year in a row. The two West African countries account for about 60% of global cocoa production.
The International Cocoa Organization estimates that there will be a shortfall of 374,000 tonnes for the 2023-2024 season compared to 74,000 tonnes the previous season. These shortfalls have meant that the price of cocoa on futures markets has more than tripled over the last year. On Tuesday, cocoa futures surged to a record high of $10,080 per tonne, ending the day at $9,622.
External Content Consumers must eventually pay more
So far, consumers have not borne the full brunt of higher cocoa costs when shopping for their favourite chocolates that are made in Switzerland. This is because prices are negotiated with supermarket chains at fixed intervals and not on a continuous basis.
“As a result, part of this increase remains the responsibility of the manufacturers. In a context of heightened price sensitivity, this exacerbates the challenges for Swiss chocolate, which is often a premium product,” Thomas Juch, a spokesperson for the Association of Swiss Chocolate Manufacturers, Chocosuisse, told SWI swissinfo by email.
To qualify as Swiss chocolate at least 80% of all raw materials (except cocoa) should originate in Switzerland. Quality standards also require milk chocolate to contain a minimum of 30% dry cocoa solids compared to just 10% in the United States.
Big players often hedge purchases by buying cocoa in advance to minimise the risk of price volatility. This means they do not have to pass on rising costs immediately to consumers and risk losing demand for their products.
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