Dure Kakao markets pushing chocolate makers in Europe to the abyss

The oldest chocolate store in Paris since 1761 is located on the corner of one of the ninth circular streets, which is the “La Mer de Fami” store (à la Mère de Famil), which is owned by many families over the centuries. Despite the profession and the revolution, the store lived thanks to the passion of the Parisians with sweets. It was obtained in 2000 by the “Dolphy Family” and expanded to sell more than 150 sweets, from Nougat to the two countries and Marziban, by 16 branches in the French capital. “The project is 100%family, and we produce everything we completely sell,” says Steve Dolphy, one of the four siblings who run the store. But the family lived in periods in which many of their competitors were forced to close their stores. Government records indicate that at least 12 family chocolate stores were closed in Europe last year, after four consecutive years of shortening of cocoa offer, which raised prices and pushed the profit margins in the sector. Although important companies such as “Nestlé SA” and “Lindt & Sprüngli AG” and “Hershey Co” have their large scope allowed them to overcome the turmoil in the market, while small businesses have faced difficult prices their customers can face. “The situation is complicated. If we do not raise prices, the company will provide losses, and we will have to hit employees, and we will have major problems. But if the increase is significant, it will be a risk. We run on the edge of the Abyss,” says Steve’s brother, Jonathan Dolphi. Cocoa consumption in Europe acquires half of the import of international cocoa pills, which feeds the $ 50 billion chocolate market. Switzerland and Germany are one of the largest consumption countries, in which the individual trades more than 9.1 kg of chocolate annually, most of which is imported from West Africa, where hard climatic conditions and agricultural pests have damaged serious crops. In the Season 2023-2024, the market saw that a shortage of supplies of 478 thousand metric tons, which is the largest deficit since the 1980s, according to the estimates of the international cocoa organization. As a result, cocoa prices rose to three times last year and approached $ 13,000 a tonne, which was a tremendous pressure on the chocolate and food manufacturers. Nestle passed on some extra costs to consumers, and also used reduction measures, such as increasing the percentage of cookies and waves in some of its products to reduce cocoa use. “The effect of high costs is tangible throughout the sector. But small businesses, which are often less capable of containing these increases, need to adapt quickly,” says Moreyle Corter, director -general of the Association of Chocolate, Biscuits and Sweets Industries in Europe. Some businesses could not resist this situation. The German company “Leysieffe”, which made one of the most famous of the country’s desserts in the country for more than a century, was closed in November last year after declaring bankruptcy in 2022 due to sharp increases in the cost of raw materials and energy. Weeks for this, Salzburg chocolate has closed in Austria, its factory, producing 57 million chocolate pieces inspired by Mozart annually. The bankruptcy of antique chocolate companies forced the high prices of small sweets to make decisions similar to those made by the Dolphy family, which raised their prices by 8%. The Austrian company “Franz Hausworth” announced its bankruptcy in November last year after increasing the cost of his famous products, such as the ‘Easter bunny’ of chocolate, caused the question in demand, according to Roman Hoserith, the general manager of the company and the third generation chocolate maker. A standard increase in chocolate prices This case is a major concern for small businesses; Since high prices can lead to consumers of independent stores with high prices to move to large retailers with mass production. Hershey and Mondeelz International, one of the largest chocolate producers on a large scale, said at the ‘Consumer Label’ conference last week that consumers will have to adapt to the ‘new normal situation’, as chocolate has become 40% and 50% more expensive compared to the past. ‘Consumers will buy from the cheapest to the cheapest, adding that’ some businesses close their doors because they can no longer resist the costs, and the market has become very competitive. The situation is now at the edge of the abyss. Cocoa -Watch data, which is the process of converting pills into butter and powder for use in the sugars, reveals that during the fourth quarter of last year, the processing in Europe has recorded its lowest levels since 2020, indicating that global consumption could be in response to high standard prices. What are cocoa alternatives? Large companies seek to lower their costs by finding alternatives to ingredients, such as replacing cocoa butter with ingredients dependent on shea butter, or using sunflower oil or palm oil to reduce expenses. But professional producers refuse to change their traditional recipes. In the midst of the serious supply crisis in Ivory Coast and Ghana, some producers have begun to look for alternative sources, on their way to Central and South America, where global cocoa production is gradually growing. In Baloga, known as the luxury chocolate industry, ‘chocolatier dumon’ has been working since the 1990s, as it provides traditional parliamentary pieces of tourists in the historic city center. The company produces about 500 kg (1100 pounds) of chocolate per week. “Most of our colleagues in the past few years have begun to focus more on South America. Mexico and Colombia have become very important to us,” said Yelle Decamp, owner of Domon Store. He pointed out that “crops in Africa were more affected by climate change.” Despite the difficult situation, the store has seen an active holiday, which reassured Decampos that the demand for “Domon” chocolate had not dropped dramatically. But he added: “We are safe at the moment, but if cocoa prices continue at this level, we will have to protect our stock at higher prices again,” and that is frightening. “For the shortage of the supply of 108 thousand tons to 40 thousand tons, mainly due to the impact of high prices on the decline in demand. But the possibilities of falling prices in the long term will depend on the decline in demand, in addition to improving the crop conditions in West Africa, according to Steve Watridge.