High sugar prices sour the mood on Valentine’s Day
High sugar prices sour the mood on Valentine’s Day
This Valentine’s Day, the chocolate economy isn’t so sweet: Hershey warned last week that it will be cutting jobs as part of an effort to trim costs by about $300 million. Meanwhile, consumers have pulled back on the sweet stuff. Candy costs almost 5% more than a year ago, according to the latest inflation data, and costs are likely to continue climbing.
Cocoa prices hit an all-time high last week, roughly doubling in a year, per economist John Baffes at the World Bank.
“So that has been a huge shock. And that, of course, comes at a time that we have huge demand,” he said.
According to commodities analyst Judith Ganes, most of the world’s cocoa comes from just two countries: Cote d’Ivoire and Ghana, which were hit by extreme rains thanks to the El Niño climate pattern.
“That caused a lot of the crop to basically fall to the ground,” she said. “And with heavy rains, you also have disease.”
El Niño is also the culprit in spiking sugar prices. Major sugar producers India and Thailand saw dryer weather.
Shortages could ease as Brazil ups exports of sugar, Ganes said. But cocoa prices could stay high.
“How many cookie manufacturers are gonna put fewer chocolate chips in their cookies? Or how many restaurateurs will put more flans and cheesecakes on the menu?” she said.
A rather bitter pill for chocolate lovers to swallow.
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