Chocolate factories that survived world wars are now facing permanent closure due to the scarcity of cocoa for chocolate production. Historic companies that were famous for their chocolate have been forced to close in recent years.
In Europe, at least a dozen family-run chocolate factories closed last year alone, victims of the fourth consecutive season in which limited chocolate supplies due to problematic cocoa production in the main growing countries have sent prices soaring.
Larger companies, such as Nestle, Lindt & Sprügengli and Hershey, have suffered a blow that has been reflected in their share prices, but due to their size they have managed to overcome the crisis.
Between a rock and a hard place
The case of À la Mère de Famille, the oldest pastry shop in Paris, which has been around for over two and a half centuries, is typical. The current owners of the shop, the Dolfi family, took it over in 2000 and now the favorite shop of Parisians and not only sells more than 150 varieties, from mandolato to pralines to macaroons, from 16 stores throughout the French capital.
If they don’t raise their prices, the company will lose money, they will have to lay off people. But if the increase is too much, it will be dangerous. They will lose customers. This shows how difficult it is to maintain balance.
Europe accounts for about 50% of global cocoa imports, which feed a $50 billion chocolate market.
Cocoa disease hits chocolate crop hard
Switzerland and Germany consume more than 9kg of chocolate per person a year. Most of it is imported from West Africa, where bad weather and cocoa disease have hit the crop hard.
In the 2023-24 season, there was a supply deficit of 478,000 tonnes, the largest deficit since at least the 1980s, according to estimates by the International Cocoa Union, sending prices soaring to more than three times last year’s levels.
Cocoa prices have hit $13,000/tonne, putting huge pressure on some of the world’s biggest chocolate and food manufacturers. Swiss giant Nestle has passed on some of the higher costs to consumers, while also increasing the proportion of other ingredients in chocolate products such as wafers and biscuits.
Smaller businesses have had less time to adjust. However, smaller businesses, which often have fewer resources to absorb these price increases, have had to adapt quickly.
The bankruptcy of chocolate makers
Some did not make it. German chocolatier Leysieffer produced one of the country’s most popular chocolate pralines for more than a century. The company went into liquidation in November, having previously filed for insolvency in 2022, citing steep increases in raw material and energy costs.
A few weeks later, Salzburg Schokolade in Austria, which had been operating since the late 19th century, closed the factory that once produced 57 million iconic Mozart chocolates.
Smaller confectioners have been forced to raise prices to survive in this cocoa price war.
Austria’s Franz Hauswirth, known for its famous chocolate Easter bunnies, filed for bankruptcy last November after being “punished” by consumers for the price hikes it was forced to impose.
Hershey and Mondelez, two giant bulk chocolate producers, said last week at the Consumer Analyst Group conference in New York that consumers will have to adapt to a new normal in which chocolate is 40%-50% more expensive than before.
Chocolate consumption to fall
Consumers will shift from buying more expensive to cheaper chocolates.
Official figures show a significant decline in the amount of cocoa beans used as raw material. In Europe, it was the lowest since 2020 in the fourth quarter of last year, suggesting that global consumption may decline due to record high prices.
Recipes and suppliers are changing…
Larger companies are trying to reduce their costs by finding alternative ingredients, such as replacing cocoa butter with shea butter-based equivalents or substituting sunflower or palm oil to reduce costs. However, smaller producers are hesitant to change their recipes.
Some are trying to find alternative sources, diversifying the regions from which they source. For example, from Ivory Coast and Ghana, where supply shortages are more acute, they are going to regions in Central and South America that are seeing their share of global cocoa production steadily increase.
Belgian chocolate makers turn to South America
In Bruges, Belgium, a country famous for its chocolate, Chocolatier Dumon produces about 500 kilograms of chocolates a week. Like most Belgian chocolate makers in recent years, they have focused more on the South American cocoa market.
Mexico and Colombia have become very important for the Belgians. Crops in Africa have suffered the most from the effects of climate change.
A busy Christmas season reassured Descamps that, for now at least, demand for Dumon chocolate has not declined significantly. «
What’s next
The forecast shows a smaller than expected supply shortfall for the current season, reducing the deficit estimate from 108,000 to 40,000 tonnes. This is not because supply will be significantly higher, but mainly because high prices are reducing demand.
The possibility of a long-term price decline will depend on how much demand is destroyed, combined with improved growing conditions in West Africa. In 2025-26, if the decline in production in Ivory Coast and Ghana is not underestimated and demand falls further, a decent surplus will be created.
Tradition is lost
Even if supplies ease in the long term, small chocolate producers have a tough year ahead.
