Sweet Chocolate, Bitter Price

Chocoholics, do you believe that chocolate could be the new caviar in the food world in 20 years?

Before looking into how much money you have to save in order to satisfy your next chocolate craving, it may be helpful for you to learn about how chocolate is actually made, from the cacao plant to a chocolate bar.

Chocolate Making

Because there are so many steps involved in the chocolate making process, here is a simplified chocolate-making 101 to help you understand where the costs of a chocolate bar may come from.

During the harvest season, cacao pods are harvested mostly in the West Africa and South America regions. The pods will then be transferred to facilities to be split open, and the raw cacao beans inside will be taken out for fermentation.  Fermentation usually lasts for 2 to 8 days. It allows the chocolate flavor of the beans to further mature. High quality cocoa beans often ferment for a long time, and the resultant chocolate products will have a subtle fruity taste. After that, the beans will be dried under direct sunlight then shipped to the chocolate maker.

Cacao Pod and Cacao Beans
Source: The Chocolate Fudge Cafe

The chocolate maker will roast the beans to bring out the real chocolate taste and color of the bean, much like the roasting process of coffee beans.  Then the beans’ shells will be removed in a winnower, becoming cocoa nibs. Next, the nibs will be ground to a thick non-alcoholic, chocolate liquor paste. From the chocolate liquor, several by-products will be made. By pressing the chocolate liquor, the cocoa butter will be separated from the chocolate presscake. The presscake can be grinded into cocoa powder after pulverization, and the cocoa butter will be poured back into another batch of chocolate liquor along with other ingredients such as sugar, milk, and vanilla to make chocolate.

The chocolate mixture then will be going under rollers to smooth out its mixture. After that, the chocolate will be kneaded in the conching machine; it may take hours to days until the chocolate gets to its desired flavor and texture. When it’s done, chocolate is tempered,and cool down to bring out its shiny appearance.  Finally, the chocolate will be molded and packaged.

Chocolate Prices Climbing

Now, after the short lesson, we understand the basic chocolate making process. Before anything can happen, we need to harvest cacao pods from trees. Turns out that's the part that drove up the chocolate price the most.

Looking at the following chart, we can see that the cocoa beans price has generally been rising since 2000. It rose from about $817 US dollars per ton in 2000 to a little bit over $3140 US dollars per tons recorded in 2011, that’s almost a 400% increase!  

Source: The International Cocoa Organization (ICCO)

So, what are the possible reasons behind this outrageous increment? One obvious reason would be that the El Niño weather pattern occurred in the winter in 2009, resulted in the water being warmer than usual in the Pacific Ocean. The year after, its counterpart La Niña brought dryness to the West Africa region which largely affected the harvest of cacao as about 70% of world supply comes from there.

Also, the West Africa region is politically unstable.  With Cocoa bean production centralized in Cote d’Ivoire and Ghana, any incident related to the trade of cocoa beans would bring fluctuation to the world price of cocoa. An example would be the ban on cocoa export from Cote d’Ivoire in early 2011, which resulted in cocoa price peaking to $3410 US dollar a ton.

Moreover, with the decreased demand of chocolate from Europe (yes, the sweet-toothed consumed less chocolate because of their economic condition), and the less profitable cocoa powder, many European cocoa grinding plants slowed down their production. As a result, the price of cocoa butter, a by-product of cocoa powder, increased 65%. Due to that fact, as both cocoa powder and butter are essential ingredients in chocolate, it's price was driven up.  

Who is Affected?

Seeing the rising price of chocolate, many consumers switched to lower-grade chocolate products instead of premium chocolate.  A 118-year-old hot chocolate shop in Madrid, Spain called Chocolatería San Ginés, was one of the premium chocolate shops that suffered. Their afternoon manager, Enrique Macas, said that the customers now want the “cheapest thing” as chocolate is expensive and the employment rate in Spain is not so bright either.

San Ginés' Signature Churro with Chocolate
Source: San Ginés

Other than individual consumers, bakeries and pastries’ stores also find ways to cut down their expenses on chocolate. The owner of DaCapo’s Pastry Café in Houston, Lisa Biggerstaff, stopped using high-end, top quality chocolate syrup for their coffee. Some other bakeries also focus on selling non-chocolate-flavor sweets to cut down their cost.   

Yet, some people may still choose to live with the rising chocolate price such as those conscious about the health benefit of dark chocolate and high-end pastry shops as quality chocolate is more of a necessity for them.  

Future Trends in Chocolate Price

Since mid-2011, we see a dropping trend of chocolate price, and it seems to have the potential to bring us back to under $2000 per tons which it hasn't achieved for a while.  Its main reasons are that there is no signal of the El Niño effect coming back this year and the “concerns over chocolate demand pressured the market”.  When there is such concern, many chocolate manufacturers rather lower the chocolate price themselves to keep demand on a higher level. Hopefully we will not have to buy chocolate at its peaked price in 2011 for a few years until the next El Niño hits.