As political instability spread through North Africa, oil exports were among the first commodities impacted. Now, it seems chocolate prices may be affected, as well, due to upheaval in the Ivory Coast.
With the Easter just passed and Mother”™s Day May 8, candy lovers are being forced to swallow price increases on some of their favorite sweets as unrest in the Ivory Coast, the world”™s largest producer of cocoa beans, has stalled cocoa exports.
On March 30, Hershey announced a 9.7 percent increase in the wholesale prices of its candy products. The company said that the move was intended to offset rising input costs, including raw materials and shipping-related expenses, according to the release.
Hershey”™s stock has been unaffected by the announcement. Since April 1, stock in Hershey has risen by nearly 3 percent.
Howard Davidowitz, chairman of Davidowitz and Associates, a Manhattan-based consulting and investment banking firm, said that Easter sales and revenue likely would not be affected.
“Right now, if you go into the stores, they”™ve got plenty of inventory,” Davidowitz said.
However, he added that a clearer picture of the situation will be revealed as the other major candy manufacturers respond to the shortage over the next several weeks.
“What”™s going to happen two months from now, I don”™t know,” Davidowitz said. “Obviously something negative, but right now they have inventory. Hershey just announced that rising costs are going to force them to boost wholesale prices. If Hershey did this, that means Mars and Grand Foods will follow.”
While local retailers have largely yet to be affected by the rising prices, there is an awareness of cocoa bean shortage among store owners.
Maria Valente, owner of Chocolations, a specialty chocolate store in Mamaroneck, said that while she will be able to maintain her current prices through April, she is unsure whether that will be the case in the coming weeks.
“We have not been affected yet,” Valente said. “Our manufacturer hasn”™t passed it along to me yet. I”™m aware of it and anticipating that any day I will get hit with it. I will be able to keep my prices the same for Easter, but I do know that in the next few months it”™s a very real possibility that we will be hit with it.”
While fighting in the Ivory Coast has moved closer to a resolution over the past week and a half with the arrest of former President Laurent Gbagbo, who had been resisting calls to step down after losing a presidential election last November, the BBC was still reporting sporadic violence in the nation”™s cities as of April 20.
As a result of the continued fighting between supporters of Gbagbo and the declared winner of the election, Alassane Ouattara, the entire harvest of cocoa beans could be affected, according to Davidowitz.
“There are lots of questions, (such as) will fighting disrupt the next harvest? So, the whole cocoa stock issue is up in the air,” Davidowitz said.
He said that as a result, both retailers and consumers may need to start looking for alternative sweets in the near future.
“I think if you”™re in this business you ought to think of alternative sweets because people are much more conscious of what they”™re spending,” Davidowitz said. “If you”™re selling handmade chocolates, those prices are going way, way up. I would say, look for alternative sweets. Clearly chocolate is the most important, but it”™s not the only one.”
For many candy and chocolate retailers, the Easter season represents one of the largest sales periods of the year, along with Halloween and Valentine”™s Day.
At Chocolations, the Easter rush is the store”™s second-most-important season behind Christmas. Valente, who said she has not raised prices for three years, said she will do everything in her power to keep customers coming back.
“I would never compromise my recipes or change anything as far as the chocolate itself goes,” Valente said. “If it became such a drastic rise that I had to cut anywhere I would cut on packaging. I would work on the packaging rather than on the chocolate itself.”
