Global cocoa bean shortage disrupts chocolate industry

London. The once stable world of chocolate has been thrown into turmoil by an unprecedented cocoa bean shortage.
For years, cocoa prices and supply had remained relatively stable, making chocolate an affordable indulgence for consumers worldwide.

However, a dramatic shift has caused prices to soar and supply to dwindle. As of early 2024, cocoa prices have surged to over $11,000 per metric tonne, nearly tripling the average prices since the 1980s.

This upheaval has been driven by ageing cocoa trees, crop diseases, and erratic weather patterns, particularly affecting the Ivory Coast and Ghana—countries that produce approximately half of the world’s cocoa.

These regions have experienced significant production declines due to black pod disease and inconsistent rainfall, causing a volatile market where prices are subject to speculative trading and reactive supply chain adjustments.

Factors fuelling the cocoa shortage

The current crisis stems from a convergence of environmental and economic factors.
In West Africa, where many cocoa trees have been productive for decades, the ageing trees are yielding fewer and less healthy pods.

In Ghana, black pod disease, compounded by adverse weather conditions, has severely impacted cocoa crops.

The market has also been heavily influenced by speculators, such as Pierre Andurand, a hedge-fund manager known for oil trading, who has capitalised on the potential for substantial profits in the cocoa sector.

This influx of speculative investment has driven prices to unprecedented levels, doubling within a year and reaching heights not seen since the 1970s.

The resulting high prices have strained chocolate manufacturers, forcing them to either absorb the costs or pass them on to consumers, thereby reducing market liquidity and exacerbating financial pressures across the supply chain.

Economic Impact on the Chocolate Industry

The ramifications of the cocoa crisis are extensive, affecting not just cocoa farmers but the global chocolate industry as a whole.

With cocoa prices reaching record highs and forecasts suggesting potential climbs to $20,000 per metric tonne, the operational viability of many chocolate producers is at risk.

Major production facilities in countries from Malaysia to Germany have had to shut down, and US-based firms have also faced closures, highlighting the widespread impact of the crisis.

The financial strain has been compounded by legal disputes over contract fulfilments and sudden market shifts.

Notably, Nightingale Investment Management has reported a decline in normal futures activity, further reducing market liquidity and potentially triggering financial failures similar to recent collapses in other commodity markets.

The National Confectioners Association notes that the US chocolate market was valued at over $25 billion in 2023.
Additionally, cocoa is now a focus of the European Union's efforts to combat deforestation, with new regulations set to take effect in December this year, affecting all companies importing cocoa into the bloc.

In response to the crisis, several startups are exploring sustainable cocoa alternatives.

Planet A Foods in Germany offers chocolate made from oats and sunflower seeds under the ChoVivia brand.

In the US, Voyage Foods is replacing cocoa with grape seeds from wine production blended with vegetable oil, cane sugar, sunflower protein flour, natural flavours, and sunflower lecithin.

Californian Cultured is cultivating cocoa from cell cultures, while UK-based Nukoko produces cocoa-free chocolate from faba beans.

Israeli startup Celleste Bio is developing "tree-free" cocoa butter and powder, and Southern Italian Foreverland is creating cocoa-free chocolate from carob.

London-based Win-Win is also turning to carob and barley for chocolate alternatives.

These innovations reflect the industry's shift towards more sustainable and resilient solutions in the face of a challenging cocoa market.

Original articles was published by Graphic News and Food Chain Magazine