Cocoa bean prices have doubled since the beginning of the year, resulting in an increase in the price of chocolate products. According to the International Cocoa Organisation (ICCO), the global supply deficit is projected to increase to 374,000 tonnes in 2023 to 2024, a significant rise from the 74,000 tonnes in 2022 to 2023. Cocoa futures prices rose to US$5,000 (RM23,697) per tonne in early February, marking it the highest since 1977.

The cocoa inflation has been attributed to reduced yields during the 2023/24 season in Ghana and Ivory Coast, which are the world’s leading cocoa-producing nations in West Africa. Additionally, recent storms, crop diseases and factory closures further disrupted harvests and the bean processors. The spread of the Swollen Shoot Virus (SSV), transmitted by insects, has also been damaging cocoa trees. Besides that, the low farmgate prices and fewer subsidies for fertilisers is expected to impact cocoa production. Consequently, cocoa output is predicted to fall short of consumption for a third season, and there are concerns that production in Ivory Coast and Ghana has entered a period of structural decline.

The demand for chocolate is expected to fall as confectionery manufacturers increase prices to help cover the rising cost of cocoa. The increased price of sugar has also added pressure to the price of a bar of chocolate. This is a result of falling production in Thailand and restrictions on exports by India, according to the Food and Agriculture Organisation’s February global price index. Shrinkflation is growing as well, where confectionery manufacturers reduce the size of their chocolate products without lowering the price.

The surge in cocoa prices is putting small chocolate companies at risk of closure. However, innovative production of chocolate provides confectionery manufacturers with the opportunity to survive and thrive in the market. For instance, Love Cocoa is currently developing a healthier chocolate which uses less chocolate and sugar, while a few other companies are working on producing cocoa-free chocolate using ingredients such as carob, barley and faba bean.

Malaysian Cocoa Board

The Malaysian Cocoa Board (MCB) is a federal statutory agency under the Ministry of Plantation Industries and Commodities. Established in 1989, the MCB was created with the aim of developing the Malaysian cocoa industry to be well integrated and competitive in the global market.

T: +6088-206 400
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Malaysia Business Group Cocoa Companies

1. Fuji Global Chocolate (M) Sdn Bhd

Fuji Global Chocolate (M) Sdn Bhd is one of Malaysia’s leading chocolate manufacturers, offering varieties of chocolate that cater to the industrial and gourmet sectors. Read more here.

2. K.L. Kris Food Industries Sdn Bhd

K.L. Kris Food Industries Sdn Bhd specialises in producing cocoa ingredients such as natural cocoa powder, alkalized cocoa powder, cocoa cake, cocoa butter and cocoa liquor. Read more here.

3. Maestro Swiss Chocolate Sdn Bhd

Maestro Swiss Chocolate Sdn Bhd is one of Malaysia’s leading food manufacturer and distributor of high-quality chocolates, confectioneries and beverages. Read more here.

References

Food Navigator Europe (4 April 2024). Cocoa crisis hits chocolate: Which companies can weather the storm, financially? https://www.foodnavigator.com/Article/2024/04/04/cocoa-crisis-hits-chocolate-which-companies-will-survive

The Malaysian Reserve (26 April 2024). Top cocoa grower seeks to avoid export defaults after price hike. https://themalaysianreserve.com/2024/04/26/top-cocoa-grower-seeks-to-avoid-export-defaults-after-price-hike/

The Star (9 April 2024). Cocoa crisis: Your favourite piece of dessert is going to cost more. https://www.thestar.com.my/lifestyle/2024/04/09/cocoa-crisis-your-favourite-piece-of-dessert-is-going-to-cost-more