A Bitter-Sweet Quarter for the Cocoa Chocolate Industry

Published 2022년 5월 30일

The global demand for chocolates has started to pick up pace, leading chocolate-producing companies to record a YoY increase in chocolate sales. The volume of cocoa grindings across three major cocoa trade associations, however, have remained flat. Currently, the Russia-Ukraine conflict has had little to no impact on cocoa demand and grindings, but the outlook for the coming months remains uncertain due to concerns that several factors could derail this positive trend.

The latest monthly update released by the International Cocoa Organization (ICCO) points out that during the first half of cocoa marketing year (MY) 2021-22, the demand for cocoa has witnessed a rebound to pre-COVID levels. Despite the fact that the global economy is facing significant inflationary pressures, the demand for a non-essential commodity like chocolate continues to increase. Some of the factors which have pushed the demand for cocoa are festivals like Easter and the resumption of the air travel sector, which has served as a major gateway for chocolate sales. Companies like Nestle, Hershey, and Mondeles have witnessed a jump in their chocolate sales with double digit growth. However, while chocolate demand and sales were increasing, cocoa grindings across three major cocoa trade associations remained relatively flat.

Cocoa Grindings of Major Regional Cocoa Associations

Source:International Cocoa Organization.

Looking at the grindings of the European Cocoa Association (ECA), the National Confectioners’ Association (NCA) and the Cocoa Association of Asia (CAA) – and two parastatal agencies regulating the cocoa sector in Côte d’Ivoire – Conseil du Café et du Cacao (CCC) – and in Ghana – Ghana Cocoa Board (COCOBOD) – we can say that there has not been any substantial increase compared to the MY 2020-21 levels. Grazings for the ECA recorded a YoY increase of 4.38% to reach 357 thousand mt during Q1.2022. On the other hand, the NCA reported a year-on-year decline of 2.77% in cocoa processing, amounting to 114 thousand mt. The CAA data showed that cocoa processing activities in the region were virtually flat at 213 thousand in Q1 of 2022. Cocoa grinding from the CCC and COCOBOD also reported a YoY decline during Q1 of 2022 compared to the same period in the previous year.

At this point of time, these cocoa grinding statistics do not reflect any negative drawbacks of the Russia-Ukraine war. However, the overall outlook for cocoa demand still remains uncertain given the increasingly uncertain economic conditions across the world. There are concerns about several factors which might derail this positive trend. The fact that Europe relies heavily on Russia’s energy and that the rising energy prices are likely to affect the operational cost of cocoa manufacturers, cocoa prices for end-consumers may increase.The next half of the season will certainly tell if cocoa demands in traditional consuming regions can stand the test of time.