Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Central bankers around the world say inflation is under control but life for chocolate lovers is not so sweet, with the price of beloved treats such as Freddo frogs still on the rise as confectionery companies pass on soaring cocoa prices to consumers.
Mondelez-owned Cadbury Australia has doubled the price of two of its most popular chocolate items after cocoa futures doubled in value to record highs this year as a result of volatile weather and disease.
The price of a Freddo frog — which was first created in 1930 and is one of Australia’s most enduring culinary creations — would double to A$2 (£1) the company said, citing the price of cocoa as the cause of the spike in the recommended retail price. The increase will also apply to Caramello Koalas.
“Due to the record global price of cocoa, and increased input costs, we have adjusted the RRP (recommended retail price) from $1 to $2, the first price change in over a decade,” Cadbury Australia said in a statement posted on social media channels on Friday.
Some 90mn of the anthropomorphic chocolate frogs, which come in a variety of flavours, are eaten in Australia each year.
“Freddo frogs are as Australian as Vegemite or Fosters. This will upset every true blue Aussie from the battlers to the blue ribbon suburbs,” said Tim Harcourt, chief economist at the Institute for Public Policy and Governance at the University of Technology Sydney.
In the UK, Freddo frogs have become an unofficial indicator of the rising cost of living, with consumers comparing each new price increase to its original price of 10p. In 2022 the treat cost as much as 50p, but it has fallen back to 30p in supermarkets including Sainsbury’s.
Belgian Biscoff maker Lotus Bakeries on Friday said commodity prices and other input costs had stabilised — with the exception of cocoa.
Soaring energy prices and supply chain disruptions following Russia’s 2022 invasion of Ukraine pushed up the price of commodities like cereal, sugar, and meat.
Prices have since fallen back to prewar levels, and central banks have signalled that global inflation is under control. The Bank of England and the European Central Bank have cut interest rates, while the Federal Reserve is expected to lower rates in September.
However volatile weather and in some cases trade tariffs have forced up certain commodity prices even as core food inflation falls.
Cocoa futures in New York and London rose to record highs this year, with New York prices surpassing $12,000 a ton in April as poor weather and disease devastated crops in Ghana and Ivory Coast, where two-thirds of the world’s cocoa beans are grown.
Chocolate makers including Mondelez, Nestlé, Lindt and Hershey have been feeling the squeeze from higher prices.
Hershey cut its annual profit forecast at second-quarter earnings last week after posting a 17 per cent sales drop. The company has hiked prices as a result of the cocoa upswing, but inflation-hit consumers have cut back on chocolatey treats as a result.
In July Cadbury’s owner, snack giant Mondelez, missed second-quarter revenue expectations as consumers traded down to cheaper snacks. Chief executive Dirk Van de Put said that consumer were still buying chocolate. “Chocolate remains a great category. It is continuing to grow with volume resiliency and despite increasing prices,” he said.
Swiss chocolatier Lindt has also continued to raise prices without too much impact on demand. The volume of chocolate sold in the first half of the year was flat, but revenues rose 7 per cent and margins a record 13.5 per cent.
Better weather in west Africa in recent weeks has given rise to hopes of a rebound in supply, causing prices to tumble. Cocoa traded in New York fell below $7,000 per ton this week, although this is still roughly double the price for the same period last year.
With disease spreading in Ghana’s cocoa growing regions, some in the industry fear hopes for a recovery in global supplies are overblown. Another year of shortages would compound the problems faced by chocolate makers.
Commodities prices are passed to consumers with a time lag because companies such as Mondelez buy cocoa up to a year in advance, rather than on the spot market. Price declines are therefore not reflected in supermarket prices until the following year.