The Czech economist warns. In stores, the price of popular food will increase dramatically. If you don’t stock up, you won’t have any money left

Cocoa is becoming astronomically expensive, chocolate eggs are available in installments, Mars-type manufacturers are secretly reducing the weight of bars, and Kit Kat has discreetly reduced the amount of chocolate. And it will get worse – yesterday, for the first time in history, a ton of cocoa beans closed at a price of over 200,000 crowns

It has never been so expensive

Cocoa beans are the most expensive in modern history. Yesterday, for the first time in history, a ton of cocoa beans on the New York Stock Exchange closed at a level exceeding 200,000 crowns, according to Bloomberg data (see graph below). Specifically, a ton of beans now costs CZK 209,719. This is indeed their highest crown price for the entire period since the establishment of the independent Czech Republic in 1993.

At the same time, the average crown price of a ton of beans in the period from January 1993 until yesterday is 49,092 crowns (see graph below – horizontal curve). Yesterday’s closing price is therefore more than four times the long-term average.

However, the price of cocoa is also a record in dollars. A ton of beans closed trading yesterday at a price tag of $8,939. At the same time, the average market price of beans in the period from 1959 to this year is around 1727 dollars. The current price is therefore more than five times, although this statement does not take into account the inflationary depreciation of the dollar.

Over the past twelve months, cocoa beans have risen by roughly 210 percent in dollar terms. The immediate reason is the heat wave combined with significant humidity that hit southern West African countries in February this year, including Ivory Coast and Ghana, two of the world’s largest producers of cocoa beans. Temperatures in that part of Africa rose to 40 degrees Celsius in February. However, due to the increased humidity, the felt temperature reached up to fifty degrees, because the humid atmosphere limits the possibility of sweating, i.e. the natural cooling of the organism. Experts relate the abnormal weather to the process of climate change.

It will get worse

However, abnormally high temperatures also threaten cocoa trees. Traditionally, one of the harvest seasons of the year begins already in April. Cocoa traders believe that the drought has damaged the crop so extensively that the current price increases are justified – and many even predict that the price will go even higher. According to a February analysis by the American bank Citigroup, the price of cocoa beans may rise to the level of 10 thousand dollars per ton in the coming months.

This year alone, the price of cocoa beans rose by 113 percent on the New York Stock Exchange. This year’s dramatic increase has not yet reached store shelves in Europe. The current prices of chocolate and chocolate products in Europe, including the Czech Republic, only reflect last year’s increase in the price of cocoa beans, from which chocolate is made. This year’s increase in the price of beans is not yet reflected in its price due to pre-stocking by chocolate manufacturers. But over time, of course, it will start to manifest itself. Customers in the Czech Republic must also prepare for the price increase of chocolate and chocolate products. Or for unobtrusively reducing the size of chocolate bars or perhaps the weight of chocolate bars – while maintaining the price, of course.

Manufacturers reduce weight

Already last year, the confectionery colossus Mars, whose bars are well known in the Czech Republic, reacted to the rise in the price of cocoa beans. Mars has secretly reduced the weight of its Galaxy chocolate bar without reducing its price. In a similar vein – and even more so due to the continued rise in cocoa prices – other confectionery and chocolate manufacturers will also react to the situation in the coming months. The key rival of Mars, the Hershey company, has already subtly reduced the content of chocolate and cocoa butter in its classic Kit Kat bar, well known to consumers in the Czech Republic.

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Confectionery manufacturers are increasingly replacing chocolate in their products with, for example, caramel, and instead of cocoa butter, they are using, for example, cheaper palm oil. This involves the mentioned shrinking, “shrinking”, weight or size of bars and other products, while maintaining the price, i.e. in accordance with the practice known as “shrinkflation”.

Nevertheless, the candy maker will eventually catch up with rising cocoa prices. Not all customers will tolerate cheaper substitutes and reduced weight for the same price. Morgan Stanley recently downgraded its recommendation on Hershey’s shares. According to the bank, the rise in cocoa prices, which began in the middle of last year, will fully affect Hershey next year. Since the beginning of last May, however, its shares have fallen by almost thirty percent.

Read also: Kaufland launched an amazing new product in the Czech Republic. It’s here, you can finally buy here at prices like in Poland

A small taste of what can still happen in the chocolate market is the current pre-Easter events in Brazil, i.e. in a country where people traditionally attach quite a lot of importance to the celebration of Easter. Some local sellers of the popular chocolate eggs are already offering them in installments due to the price increase.

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