Chocolate makers' prospects sour as cocoa prices spike
Chocolate makers' prospects sour as cocoa prices spike
Chocolate makers like Hershey and Mondelez face tougher trading conditions over the next year as they attempt to pass on soaring cocoa costs to cash-strapped consumers who are cutting back.
I remember being told with climate change this was one of the things we lose.
Poor Hershey; I wonder how their CEO will ever afford his fifth yacht now?
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LONDON/NEW YORK, Aug 18 (Reuters) - Chocolate makers like Hershey (HSY.N) and Mondelez (MDLZ.O) face tougher trading conditions over the next year as they attempt to pass on soaring cocoa costs to cash-strapped consumers who are cutting back.
Consumers in Europe and North America have already seen price increases of about 20% over the past two years and are starting to cut back on the amount of chocolate they buy, data pulled for Reuters by market researchers Nielsen shows.
But after more than two years of higher prices, retailers are pushing back, analysts said, resulting in a battle that puts chocolatiers' margins and profitability at risk.
One such battle resulted in Mondelez previously pulling Cadbury and Milka bars from Belgian supermarket chain Colruyt's shelves after failing to agree on prices.
Barry Callebaut (BARN.S), the world's biggest chocolate maker supplying most major brands including Nestle (NESN.S), doesn't expect any growth in sales volumes this year.
Rabobank says those cost pressures could continue into next year due to the El Nino weather event in West Africa and the lack of alternate producers who can ramp up output quickly.
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