To counter the price of cocoa, which has reached an all-time high, the chocolate industry has chosen to subtly reduce the format of products or reformulate the ingredients. This Easter, indulging in chocolate treats will require navigating the bitter realities of re-duflation and de-duflation, getting less for the same price.
As Easter approaches, families and chocolate lovers look forward to treating themselves, a tradition that marks this festive season. However, this year’s celebrations will take place against a backdrop of soaring cocoa prices, representing a significant challenge for consumers, but also for the entire chocolate industry.
An unprecedented challenge
The price of cocoa has skyrocketed, almost 40% higher than its previous record set 47 years ago. Last week, cocoa contracts reached an all-time high of $7,060 per metric ton, more than double the November price and surpassing the all-time highs of $3,830 in 2011 and $5,100 in 1977. The increase was a result of a combination of factors, including increasing cases of black pod disease in major producing regions like Ivory Coast and Ghana, which together account for almost 60% of global cocoa production. Additionally, heavy rains have disrupted the transportation of supplies to ports for shipping, while speculation further inflates prices.
Despite the sharp rise in costs, global demand for cocoa remains unwavering, particularly as the middle class in emerging markets continues to desire chocolate products. Large companies like Barry Callebaut are responding by purchasing massively in advance, anticipating continued demand.
Industry response and consumer impact
Industry giants, like Hershey and Mondelez (the company behind Cadbury), are reporting the strain of high cocoa prices on their businesses. Hershey anticipates possible impact on profits, while Mondelez reports a drop in sales volume as consumers tighten their belts. This scenario suggests that chocolate manufacturers, retailers and chocolatiers will likely have to pass these increased costs on to consumers. However, the strategy goes beyond simple price increases.
Reduflation: the invisible price increase
In Canada, the phenomenon of “reduflation” has led to significant reductions in the size of many beloved chocolate bars and products, all in an effort to maintain existing price points. Over the past 12 months, notable changes include the reduction of popular Cadbury eggs by 12.9%, from 39g to 34g; ; the Toblerone bar, formerly 400 g, now weighs 360 g and the Oh Henry! went from 62.5 g to 58 g, a reduction of 7.2%. Other popular treats like Coffee Crisp and Hershey’s Chipits have had their sizes reduced by 10%. One of the most striking adjustments is for M&Ms, where 1kg bags now weigh just 800g each – a 20% reduction – with prices remaining constant. Many other products likely underwent re-flation, signaling a widespread strategy to counteract economic pressures while keeping prices stable for consumers.
Deskilling: a sneakier strategy
Beyond reduflation, the industry is also adopting the strategy of “dequaliflation,” where manufacturers reformulate products with cheaper ingredients to reduce costs. This strategy involves replacing cocoa with artificial flavors and other new ingredients, subtly changing ingredient lists without most consumers noticing. Dequaliflation is more difficult to detect and, coupled with the end of the reduflation cycle for most products, represents a new challenge for informed consumers.
The bitter reality of cocoa consumption
The current cocoa price crisis highlights a broader conversation about sustainability, consumer awareness and the future of food manufacturing. Although chocolate is not essential for survival, it is a treat, a guilty pleasure for many people. Ongoing changes in the industry mean consumers need to be extra vigilant and educated about their purchases, recognizing that they may be receiving diminished value for the same price, particularly when it comes to cocoa products.
As we navigate this Easter season, the joy of eating chocolate comes with a heightened awareness of the complexities behind our favorite treats. The situation calls for a balanced approach from all stakeholders, including producers, consumers and policy makers, to ensure the long-term sustainability of cocoa production and the preservation of our cherished chocolate traditions in the face of these economic challenges.