Bonbons and truffles are even more of a luxury this Valentine's Day.
For the third year, cocoa harvests are coming up short due to abnormal weather, which has led to cocoa beans being so expensive that chocolate makers have little choice but to raise their own prices.
"It's been a pretty dramatic change to our business model," says Alex Whitmore, who runs Taza Chocolate, a Boston-area manufacturer.
His company makes mainly bars, but also Mexican-style chocolate, chocolate-covered nuts and bark. Taza's focus on darker, cocoa-dense chocolate means Whitmore has been paying a premium for cocoa beans.
"The cost of cocoa for us has almost tripled," he says. "We did raise prices by almost 15% … and it's a possibility that we may have to increase again, but we're doing everything we can to kind of hold the line."
Big chocolate brands such as Nestle, Hershey and Mondelēz, which makes Cadbury and Milka, have all raised prices, too, and warn of further increases over this year.
The biggest cocoa deficit in decades
The world's supply of cocoa is having the worst shortage in 60 years, says David Branch, an agricultural industry analyst at Wells Fargo.
That's because most of the world's cocoa comes from West Africa, particularly Ivory Coast and Ghana. Changing climate patterns have farmers there dealing with extreme weather and sick trees.
"Too much moisture followed by getting too hot and drying out too much," Branch says, explaining that shifting weather patterns stress older cocoa trees and make them more susceptible to disease.
Globally, the latest crop data showed production down 13% from a year earlier, Branch says, marking the third year of declines.
"We're seeing improvement in deliveries," he says. "But it's a pretty big hole to climb out of."
Last Valentine's Day, the price of cocoa on the futures market broke a 47-year record. It has doubled since then.
The financial rollercoaster has drawn many speculators trying to make a quick buck on big price jumps, which has only exacerbated the volatility.
What comes after cocoamageddon
Shoppers, so far, don't seem too disheartened. Chocolate sales are still rising, despite higher prices.
"Consumers quote chocolate as one of their indulgences that they cannot live without," Mondelēz CEO Dirk Van de Put told investors last week.
And the good news is that the market is correcting itself — just slowly.
Bakeries and other companies that don't absolutely have to use chocolate are focusing more on other flavors. Big manufacturers are pushing shoppers toward chewy, gummy or other less-chocolatey candy. KitKat, for example, has launched cinnamon-toast and Neapolitan flavors, without chocolate dip.
Countries outside West Africa have stepped up their cocoa production. Branch says farmers in Ecuador, for example, have planted new trees that will produce a lot more cocoa a few years down the road.
"We're going to see this ease," he says. "It's just not a very quick fix."
And fundamentally, pricier cocoa means more money for cocoa farmers in West Africa and elsewhere to invest in their farms — to grow younger trees, fortify older ones and make the cocoa bean supply more sustainable.
"The price of cocoa is really responding to a long-term underinvestment in the cocoa sector," says Whitmore at Taza Chocolate. "It's a true correction for ... so much underinvestment because the price has been so low for so long. We're paying for that now."
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