New data indicates that consumers in Europe and the United States are reducing chocolate consumption post-pandemic as a result of the cost of living crisis.
Speaking with Reuters, Hershey Co’s Vice President of Investor Relations, Melissa Poole, said that chocolate prices have risen in the “high single-digit, low double-digit”range over recent months, and retail sales volumes have seen a 2-3% dip as a result.
“We are expecting that as we move through the year…we will see a bit of pull-back in volume,” she stated, commenting that prior to the recent price increases, “consumers haven’t really reduced consumption much at all.”
In the US and Europe, the pandemic saw chocolate consumption surge as people adapted to their new homebody lifestyles, buying their Cocoa-comforts in bulk with the assistance of government financial aid.
Now, however, as consumers are faced with rising living costs, chocolate companies are noticing a shift towards individual chocolate bars instead of multipacks. Market researchers at IRI in Chicago noted that the US saw a 1.5% decline in the volume of chocolate sold compared to a year ago, in the 13 weeks leading up to June 12th, as prices rose by 8.2%.
In contrast, data from the IRI also highlighted that store-brand chocolate, which typically costs less than name-brand chocolate, saw sales increases of 8% in the last 6 months.
“We’re going to see chocolate becoming more sensitive to price. Consumers will treat themselves, but it will be smaller sizes, a small treat. That’s why you’re seeing volume decline.”
Daniel Sadler, Client Insights Principal, IRI
Similarly, in Britain, London-based consultancy firm McKinsey found that in the six-week run-up to mid-May, 40% of Brits had opted for cheaper confectionary products over their usual purchases. Cheaper chocolate usually has a lower Cocoa content, meaning that the trend toward more cost-effective snacking could negatively impact Cocoa demand.
Poole points out that value can look different from person to person: “For those who have the money and have the space to store bigger bags, value to them is the cheaper price per pound.”
“Value to others might be something ‘accessible to me’ at an absolute lower price point.”
Melissa Poole, Vice President of Investor Relations, Hershey Co
Chocolate producers also face increased costs, exacerbating the challenge of making their products more accessible to cash-strapped customers. Some brands have responded with “shrinkflation” – a term used to describe the downsizing of a product while the price remains the same.
Waitrose reported that sales of chocolate brands perceived as ‘ethical’ were also on the rise, with Montezuma and Tony’s Chocolonely seeing 52% and 35% sales boosts, respectively, in the past year.
Hershey’s has used this technique in some cases to retain customers with less cash to spend on non-essential products, though Poole notes they have not used this tool “as often as you might think”due to the time and planning associated.
Mondelez, the makers of Cadbury chocolate, has also “made the decision to slightly reduce the weight of certain products,” according to spokesperson Tracy Noe. In the UK, for example, the popular Cadbury’s Dairy Milk chocolate bars are now smaller than before.
Jane Goodson, a confectionery buyer at UK supermarket Waitrose, said, “Generally speaking, trading for chocolate is moving back to pre-pandemic patterns, with people thinking more about gifting and buying into individual ‘grab and go’ products again.”
Waitrose reported that sales of chocolate brands perceived as ‘ethical’ were also on the rise, with Montezuma and Tony’s Chocolonely seeing 52% and 35% sales boosts, respectively, in the past year.
Like all food businesses, we are seeing significant input cost rises but we’re doing our best to maintain affordability for consumers. Packaging, labour, raw materials – notably sugar, milk cacao liquor but not cacao butter – and logistics have all increased in price.
Ben Greensmith, UK and Ireland Country Manager, Tony’s
It appears that consumers still have a sweet tooth for chocolate, and the demand for ethically produced chocolate is by no means dwindling. However, pricing will hold even more weight going forward as people look for ways to cut living costs.
