Chocolate Price

LINDT CEO ISSUES CHOCOLATE PRICE WARNING

Lindt & Spruengli AG alerted that the premium imposed by the world’s largest cocoa farmers in West Africa will give chocolate manufacturers little choice but to raise their prices.

Cote d’Ivoire and Ghana are charging $400 per metric ton above the futures price for shipments from October in a project to increase the pay of mainly impoverished farmers. The two neighboring countries represent greater than 60% of global cocoa supplies.

Lindt, sources as much as 80% of its cocoa from Ghana, has had its recipes in position for decades. Switching suppliers would take some time as altering the bean mix would influence the taste of its products, Chief Executive Officer Dieter Weisskopf stated in an interview in Zurich. Other growers will probably increase their prices too as the premium takes hold, he said.

Mars Inc. and Nestle are among the chocolate manufacturers that have started buying cocoa for the 2020-21 season with the premium. But while most companies in the cocoa and chocolate sectors have agreed with the principle of paying farmers a better price, many are still grappling with the strategy as the premium can’t be hedged. While Ghana is implementing the living-income premium in full, the country is giving buyers some discount on the differential it charges for the quality of its beans, Weisskopf said in an interview.

” That’s not them being accommodating,” he said. “It’s just that now demand is already suffering a bit. They already can’t demand that premium.”
Higher prices could prompt chocolate makers to choose cocoa alternatives while also enticing farmers to grow more beans, Weisskopf stated.

” Sooner or later that could cause decreased volume demand for cocoa and, naturally, also result in oversupply,” he stated. “But we’re not discussing a time range of twelve-month here; we’re discussing two to three years.”

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