A bitter taste: Why are chocolate prices soaring?

Love chocolate?Well, get ready to fork over more money for your favourite treat.CNBC quoted data as showing chocolate prices have soared 14 per cent this past year.CNBC quoted Sergey Chetvertakov, S&P Global Commodity Insights’ Principal Research Analyst, as saying, “The cocoa market has experienced a remarkable surge in prices [...] This season marks the second consecutive deficit, with cocoa ending stocks expected to dwindle to unusually low levels.”But why is this happening? And what happens next?Let's take a closer look:Why is this happening?Experts blame climate change.As per The Wall Street Journal, cocoa prices are at their highest in nearly four decades.Sergey Chetvertakov told CNBC El Niño has caused a drought which has resulted in West Africa having smaller cocoa harvests.According to Forbes India, the Ivory Coast is battling floods and wet weather conditions that are damaging cocoa trees.

The Ivory Coast provides 40 per cent of the world’s cocoa.

CGTN quoted research from Lauranne Gateau-Rey, a researcher at the University of Cambridge, as saying El Niño causes extreme weather that negatively affects forests and agriculture.“Cocoa plantations can be devastated by drought, and its increasing frequency is likely to cause decreased cocoa yields in the coming decades. Furthermore, because cocoa, like many crops, is grown somewhat beyond its climatic limits, it and other crops could be the "canaries in the coalmine" warning of forthcoming major drought effects on semi-natural and natural vegetation,” the piece warned.Meanwhile, sugar hasn’t escaped unscathed either.ABC quoted Rabobank analyst Pia Piggott as saying, "Cocoa futures have actually been on an upward trajectory since last September.""We've seen the price of cocoa on the ICE [Intercontinental Exchange] spot market has gone up 27 per cent [in the] year to date, and there is potential for that to rise."

Meanwhile, sugar hasn’t escaped unscathed either.

Malayalmail quoted Piggott as saying that the price of raw sugar has increased 20 per cent since the start of 2023.“For manufacturers, if 60 per cent of your goods are sugar, that is a substantial input price increase,” Piggott further said.According to Yahoo News, while Brazil, a top sugar-producing nation is expecting a record harvest, prices aren’t expected to come down any time soon.“Some of our favourite types of chocolate in Australia have risen in price by around 10 to 20 per cent, so we’ve seen inflation in the category and that could continue if these cost pressures are going to increase,” Piggott was quoted as saying by The Guardian.What happens next?Cocoa prices are set to rise further – which means consumers will have to shell out more.Piggott told ABC, "With the additional risk of El Niño adding to production prospects, we're expecting that our price forecast really is that for cocoa to still rise into the next year." “If El Niño becomes more intense and reduces cocoa yields and quality, consumers may pay higher prices,” the CTGN piece warned.

Consumers are also likely to decrease their chocolate intake.

The Guardian quoted Rabobank’s senior dairy and food retail analyst Michael Harvey “Because there is belt-tightening going on and there’s going to be reduced spending on discretionary products, that might mean a little less chocolate on the go and less impulse purchasing out and about.“However consumers will still likely want to have some indulgence and eat chocolate when they are at home.”With inputs from agencies