New York — Since cocoa prices are reaching historic highs, Easter baskets may cost consumers bitterly. Cocoa futures have doubled since 2024. West Africa supplies almost 70% of the world's cocoa, but rising temperatures have devastated harvests.
Sugar costs are rising. Sugar futures for a pound rose 8% in 2024 following 2.7% in 2023. Chocolate giants like Hershey's and Mondelez have passed on those costs and more: Net profit margins rose to 16.7% in 2023 from 15.8% in 2022 for Hershey. Mondelez increased to 13.8% in 2023 from 8.6% in 2022.
Both corporations reported lower sales volumes in recent quarters as consumers weary of increasing pricing. The National Retail Federation anticipates Easter spending to fall, but it will still be strong by historical standards. Its newest survey predicts Easter candy spending of $3.1 billion, or $24.78 per person. That's down from $3.3 billion, or $26.31 per person, last year.
Mondelez, which owns Cadbury, has raised pricing to offset rising cocoa prices. The corporation claims 13% of the global chocolate market. pricing in its chocolate category rose up to 15% in 2023, and increased pricing would likely help it fulfill revenue growth expectations of 5% in 2024.
Pricing is clearly a key component of this plan,” Mondelez CFO Luca Zaramella said in a January conference call. "Its contribution will be less than in 2023, but higher than average."
As inflation rose, Hershey boosted chocolate prices last year and several supermarket and food service prices early in 2024. Sales could climb 3% this year. Though most of its price hikes are carryovers, the business says it will cover inflation.
The government's newest consumer price data shows candy and other sweets jumped 5.8% in February compared to a year earlier. Since late 2023, increases have stayed around that level.
Overall, inflation is falling, but it's still more than economists expected in 2024. Consumer spending and economic growth are increasingly threatened by high inflation and interest rates, according to analysts.
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