The effects of cocoa inflation 400% later
Food prices is a topic that does not go off the agenda, not only in Bulgaria, in the last few years. After the big jump in 2022, the situation has only somewhat calmed down, and much higher than the previously known levels.
Chocolate is a luxury commodity
A look at the chocolate shelves in Bulgarian stores: An established international brand has recently been priced three times higher than what they were until recently. Elsewhere, the increase is not so distinctive yet, but it is probably soon that the simple pleasure of eating chocolate is already too luxurious.
The price of cocoa is one of the most discussed topics in the world stock markets in the last 3 years.
| The London Stock Exchange reported over 400% growth since the late 2022, when cocoa inflation began. |
This is not a precedent and not speculation. The reasons are structural and it will take years to be mastered, commented to Dnevnik from one of the largest producers of Nestle chocolate products.
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In the last year alone – 2024, the price of cocoa jumped by 129%, but this is by far not the only increased expense, Mondelies added, owner of Svoge. First of all is the sugar, which is traded at a 13-year peak, which has reached in recent months. In the group of rising are also energy, packaging and transport. « This combination of market factors means that the production of our products is much more expensive than before, » the company said.
What about the end prices
Anyway, this fact looks to the users, the transfer of all the appreciation of the chain to the end customer, especially for non -essential products, is not possible. Therefore, the increase in final prices at a market full of products of competitive businesses is a final solution.
« We are aware of the economic pressure that consumers continue to be faced. Increasing consumer prices is a final means for our business and we are trying to take the increase in production costs when possible, » Mondeliz said.
Therefore, every promotion is well thought out with the quality compromise is not a good solution. With high inflation in 2022, a number of companies have reduced the quantity in packaging, not just in chocolate products to preserve the price. « Quality is fundamental to our brands and their heritage, and we refuse to compromise on this principle, » the owners of the Svoge chocolate factory say today.
Nestle also says that, as with the large appreciation of all raw materials as a result of the pandemic, they have not transferred the whole increase to consumers now. « We are a responsible company, always aimed at our consumers and we want our products to remain available, » they told Dnevnik.
The counter measures are many optimization processes throughout the supply chain. Globally, the company’s activities that support the farmers from which it buys raw materials are enhanced.
How do users react
The observations of chocolate producers are that consumers have changed their behavior in recent years, long before cocoa inflation. The pandemic has increased the trend of calculating shopping. In addition, there are numerous products in which cocoa products are replaced with significantly cheaper alternatives and this allows price-sensitive consumers to continue shopping sugar products.
The category of chocolate products is one of the largest food categories with multiple segments and suggestions for buyers. That is why reality denies the theories of price elasticity – consumers remain loyal to their brands, do not give up the pleasure of enjoying chocolate and even buy more during the holiday periods. Such a picture of the market is outlined by Nestle.
They remind that inflation is growing with income growth and consumers does not take long to adapt. Where a decline is reported, there are traditional segments that lack innovations that attract consumers. At the same time, their observations are that there is an increase in the consumption of chocolate products for children, seasonal products for Christmas and Easter.
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Without entering into detail, Mondeliz indicates that they observe the prices on consumption, but rely on the brands of customers offered by them, offering different sizes to respond to different budgets.
Where will things go
Consumers’ observations on their own pocket show that prices, especially in recent years, generally do not return to levels known from before the pandemic. Manufacturers of chocolate products are also not optimistic that the price of cocoa may return to its previous 3-4 times lower levels. « This is valid for all plant crops in the world, as climate change affects not only cocoa but also coffee, oranges, etc., » Nestle commented.
According to the International Cocoa Organization (ICCO), « high prices, which have been prevalent for several years, encourage manufacturers to spend more efforts and resources to grow cocoa despite continuing challenges. » For 2025, ICCO predicted an increase in production by 7.8% compared to the 2023/2024 season, while at the same time due to a sharp increase in prices in recent years, Cocoa demand is expected to decrease, Mondeliz commented. This means that a decrease in demand due to the increase in cocoa prices will eventually lead to a decline in prices to more sustainable levels.
As in other spheres, the rise in raw materials is not only coming, but it goes in parallel with increasing the labor costs due to the lack of labor and the administrative increase in the minimum wage. Nestle states that they pay decently the work of their workers, and this, combined with inflation in the raw materials and shortage of workers, greatly complicates the management of costs. The appreciation of other costs – logistics, for example, requires increasing optimization. « We do not want our users to pay inefficiency, but to pay for the added value and emotion and enjoyment of our delicious chocolate products, » the company said.
