Decline or rise? Europe cocoa processing numbers released

By Oliver Nieburg

- Last updated on GMT

Cocoa prices similar to levels last year in Q1, but rose in March due to dry weather concerns. Photo: iStock/CreativeNature_nl
Cocoa prices similar to levels last year in Q1, but rose in March due to dry weather concerns. Photo: iStock/CreativeNature_nl

Related tags International cocoa organization Chocolate

Figures from grinders including Cargill, Barry Callebaut, Nestlé and Mondelēz show the volumes of cocoa processed in Europe in the first quarter of this year.

First quarter cocoa grindings in the EU and Switzerland reached 337,029 metric tons (MT), data published today by the European Cocoa Association shows.

This represents a 0.2% drop on Q1 last year.

Value not volumes driving the market

It comes as chocolate confectionery volumes in Europe, the Middle East & Africa (EMEA) declined 2.2% from September 2015 to February 2016, according to Nielsen.

Laurent Pipitone, director of the International Cocoa Organization’s (ICCO’s) economic division, said at a recent industry conference chocolate makers in developed markets like Europe were shifting away from volume growth towards higher-value products such as premium chocolate with higher cocoa percentages.

Value sales of chocolate confectionery rose globally in 2015, driven by the rise of dark chocolate. Dark chocolate retail value sales climbed 31% worldwide from 2008 to 2013, according to Euromonitor International. Europe accounted for 60% of dark chocolate sales in 2013.

European cocoa processing

Europe and Russia is the main region for cocoa processing. The International Cocoa Organization (ICCO) estimates 4.23m MT of cocoa grindings in 2015/16, distributed as follows:

  • Europe and Russia​: 1.59m MT (38%)
  • Africa​: 895,000 (21%) 
  • Asia & Oceania​: 878,000 MT (21%)
  • Americas​: 868,000 MT (21%)

Cocoa prices during Q1 this year remained around the same level as the same period last year, according to the International Cocoa Organization’s (ICCO) monthly average of daily prices – which gives averages of the ICE Futures Europe (London) and ICE Futures US (New York).

Its figures showed February 2016 cocoa prices averaged $2,916 per MT, around 1% lower than February last year.

Dry weather and Ivorian price incentives

But the ICCO average daily cocoa price rose $158 per MT in March compared to the previous month amid concerns dry weather could harm the crop.

Rabobank’s March Agri Commodities Monthly report said cocoa arrivals at ports in Côte D’Ivoire were only 4% lower so far this season compared to the same period last year, despite the weather concerns.

It said there had been a 17.6% increase in internal prices paid to Ivorian cocoa farmers since October, “which shows how important the economic incentives are”.

Chocolate and cocoa demand heating up or cooling down?

But it said Easter may not have brought a chocolate binge.

German confectionery association BDSI previously said sales of chocolate Easter bunnies in Germany likely dropped 6% this year to 200m units.

But Q1 cocoa grindings in Germany still rose 1.2% to 99,026 MT, according to the trade body. Germany is Europe's second largest cocoa processor behind the Netherlands. 

Western Europe cocoa grind
Source: StatSer (Statistic Services) / ECA.

Rabobank said that at global level: “We believe warm weather must have prevented some cocoa consumption, which tends to be higher in cold climates.”

The National Oceanic and Atmospheric Administration (NOAA) has estimated average land temperature rose 2.3°C in February this year, the highest seen for the month in 137 years.

Barry Callebaut to drop less profitable cocoa ingredients contracts

Cocoa consumption shift

Europe accounted for 39%​ of cocoa consumption in the 2008/09 cocoa year, but made up 36%​ in cocoa season 2013/14, according to ICCO figures. It came as Asia & Oceania grew its share from 15%​ to 17%​, while Africa grew its share from 1%​ to 4%​ of global consumption.

The world’s top cocoa grinder, Barry Callebaut, grew EMEA volumes 6.5% in its first half of fiscal 2016, it reported last week.​ It came as the company reached chocolate outsourcing agreements with Romanian firm Romega and another unnamed European company.

But Barry Callebaut added the combined cocoa ratio - the price of cocoa butter and cocoa powder at European factories relative to the futures price for cocoa beans – was harming profits in its cocoa ingredients division.

It has begun phasing out less profitable contracts for cocoa ingredients such as butter, powder and liquor.

The US National Confectioners Association is due to release cocoa grind figures for North America later this week.

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