- Written by Peter Hoskins
- business reporter
image source, Getty Images
Global cocoa prices have hit record highs as dry weather damages crops in West Africa.
Cocoa prices on the New York Commodity Market hit a new all-time high of $5,874 (4,655 pounds) per tonne on Thursday.
The cost of the main ingredients for making chocolate has roughly doubled since the beginning of last year.
The rise in cocoa prices has already been passed on to consumers, putting pressure on major chocolate makers.
Hershey, one of the world's largest chocolate makers, warned on Thursday that “historic cocoa prices are expected to limit profit growth this year.”
The company's CEO, Michelle Bach, also did not rule out setting prices for customers.
“I can't speak to future pricing,” he said on a conference call with analysts, adding, “Given the situation with cocoa prices, we're looking at all the tools in our toolbox, including pricing, as a way to manage our business.” “I plan to take advantage of it,” he added.
The comments were made as Hershey announced its financial results for the three months ended December 31st. According to the statistics, sales fell by 6.6% as consumers cut back on spending on sweets due to inflation.
Last month, Mondelez, which owns the Cadbury brand, cited rising raw material costs as one of the challenges it faces in the year ahead.
Chief Financial Officer Luca Zalamella said the company had “significant increases in both cocoa and sugar.”
Overall UK supermarket food and drink inflation slowed to 8.3% in November, but chocolate price growth was significantly higher at 15.3%.
Cocoa prices have soared due to crop failures in West Africa, which produces most of the world's supply.
Increased temperatures and changes in rainfall patterns due to climate change can also affect yields.
“Traders are worried about another shortening production year, but that sentiment is being dampened by El Niño, which is threatening West Africa's crops with hot and dry weather,” said Jack Scoville, an analyst at Price Futures Group. It's getting even higher.”
