“Chocolate demand falls even as cocoa situation improves – BloombergSlowing growth at cocoa factories worldwide is exacerbated by soaring prices, impacting processors’ profits. Processing volumes in
Europe, Asia, and North America have reached multi-year lows, and prices for the sweet treat are unlikely to fall quickly.
”, — write: unn.ua
DetailsCocoa processing volume (the process of converting beans into butter and powder for chocolate and other confectionery products) in Europe, the largest consumer, is likely to have fallen to its lowest level in the third quarter in at least a decade, according to the average opinion of 11 analysts and traders surveyed by Bloomberg.
Processing volume in Asia over the past three months is likely to have reached an eight-year low. North America is seeing its lowest figure in two years.
Processing volume in key producing countries is also in decline. Official data, considered an indirect indicator of cocoa demand, will be released later this week.
Shares of Swiss chocolate giant surge on news of potential privatization03.10.25, 15:19 • 3214 views
Although New York cocoa futures have recently fallen sharply – by half compared to their December peak – chocolate manufacturers are still operating on expensive supplies secured during a period of high prices. According to Jonathan Parkman, head of agricultural sales at Marex Group, a price recovery is not expected even in the current quarter, as manufacturers have already locked in high prices for the next six months.
“Demand for cocoa butter is weak, and people are not as concerned about supply now as they were last year,” Parkman said. “We are seeing more active substitution of cocoa butter due to rising cocoa prices.”
As an uninterrupted supply deficit pushed prices up in 2024, setting record highs, chocolate manufacturers responded by raising prices for consumers and changing recipes to include more fillers, such as nuts, and replacing cocoa butter with oil.
Cocoa butter prices – a major factor in profitability – have fallen by approximately 75% this year. The continued decline in demand has led to a key profitability indicator, which takes into account the ratio of cocoa butter and powder prices to the cost of cocoa beans, turning negative in August, making it unprofitable for processors to grind beans at full capacity, according to KnowledgeCh data.
Despite the fact that the historical cocoa supply crisis is easing and weak demand has pushed prices back to early 2024 levels, chocolate bars on supermarket shelves are unlikely to get cheaper anytime soon, the publication writes. And consumers are not rushing to buy. According to research firm Circana, sales volumes of chocolate candies in North America for the 13 weeks ending September 7 decreased by more than 21% compared to the same period last year.
“This category is entering a new normal with high costs and persistent volatility, which requires industry participants to be flexible and constantly adapt,” wrote Julia Buech, senior analyst for consumer food products at Rabobank, in a report last month.
The combination of expensive sweets and cheaper candies with less cocoa also worsens the demand picture in the future.
“Manufacturers have taken steps to reduce the use of cocoa products. Can they now quickly return to what they were? I don’t think so,” said Judy Ganes, president of J. Ganes Consulting. “Will they increase the use of butter if consumers don’t feel the difference when using palm oil or other substitutes?”
Cocoa beans overtake bitcoin to become the most profitable commodity of the year25.12.24, 02:26 • 37381 view