Dispatches from State of the Industry Conference in Miami

Not in industry’s interests to raise chocolate prices in face of cocoa shortfall: NCA

By Oliver Nieburg

- Last updated on GMT

“Cocoa is cyclical and companies here are used to that," says NCA.
“Cocoa is cyclical and companies here are used to that," says NCA.

Related tags Cost Price Supply and demand Nca International cocoa organization

Chocolate makers are well prepared for current cocoa deficit forecasts and will only be forced to raise prices if other inputs such transportation become costlier along with cocoa, according to the National Confectioners Association (NCA).

Speaking to ConfectioneryNews at the NCA’s State of the Industry Conference in Miami, Susan Smith, senior vice president, communications and outreach at the NCA, said: “The companies who make a retail product don’t want to increase the price, they want their products to have value for their consumers.”

She said that companies had stepped up efforts to secure a sustainable cocoa supply following industry forecasts of a 1m metric ton (MT) deficit by 2020 in the last few years. Figures released by the International Cocoa Organization last week forecast a 115,000 MT supply and demand shortfall for the 2013/14 season.

“Whether there will be an increase in chocolate prices is not something we can predict,”​ said Smith.

‘When costs of other things go up…they have to make a decision’

“Cocoa is a percentage of manufacturers’ cost but so are others things which aren’t necessarily even ingredients. When the cost of all their different inputs go up, whether it’s the price of gasoline or production, then eventually they have to make a decision.”

But Smith said that the NCA’s members purchased their cocoa in advance and were well prepared for the forecasted deficit.

“Cocoa is cyclical and companies here are used to that. If you look at the historical prices of cocoa, it fluctuates depending on weather and other things. Companies are prepared for that. But if it goes on for years and years, that’s a different story”

She continued: “What we’re finding is that folks are sounding the alarm, so there will be every effort to help cocoa farmers to produce more cocoa.”

Among those sounding the alarm have been joint global chocolate leader Mars and prominent US chocolate supplier Blommer.

'Majority of cocoa certified in next few years’

Over the last two years, the industry has moved closer to a more sustainable cocoa supply with major suppliers such as Hershey, Ferrero and Mars committing to sourcing only third party certified cocoa by 2020. Others such as Nestle and Mondelez plan to purchase certified cocoa, but will also rely on their own sustainability initiatives.

Smith said: “A lot of companies have committed to doing some sort of certification in some cases it’s UTZ in other cases it’s Rainforest Alliance or Fairtrade, but in other cases it’s what they’d call verified sustainable, so they are doing a lot of the same things, perhaps working internally or with their own co-ops or own processors. Companies will have to choose the best way do it. It’s up to the companies.”

“My guess is that the majority of cocoa will be certified in the next few years.”