Shortage will be costly for chocaholics

CHOCOLATE lovers be warned - there's a looming shortage and it's going to drive prices up.

Cocoa grinders are increasing their output, but a declining supply of beans from West Africa will mean the first shortage in three years.

And when supply cannot meet demand, there is only one thing that can give: price.

Earlier this year, cocoa grinders cut back output and started using reserves of butter to fill supply orders from chocolate makers.

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Cocoa beans make both powder and butter - the former is used in products like biscuits and icecream whereas the latter accounts for about 20 per cent of a chocolate bar.

But reserves are now running out just as chocolate buying is accelerating and as the biggest cocoa growers' harvests are crippled by drought.

Prices are estimated to rise as much as 7.5 per cent to more than $3200 a tonne in the first half of next year, according to the mean of 17 analyst estimates compiled by Bloomberg.

New Zealand chocolate maker Whittaker's could not rule out a price increase for their bars here.

 National sales manager Matt Whittaker said: "It won't affect pricing in the short term, but as the [research] states, if demand outstrips supply, the price of cocoa will go up and ultimately chocolate prices will follow, assuming that happens."

Cadbury said it did not comment on prices and commodities.

It is estimated cocoa demand will exceed production by 101,000 tonnes this season.

However, one bank expected the ratio to be even larger, with demand coming in at 122,000 tonnes more than production.

The shortage of cocoa beans means that global output will drop 2.9 per cent to 3.85 million tonnes.

This will be led by smaller harvests in Ivory Coast, Ghana, Indonesia and Nigeria - the four nations produce 74 per cent of the world's beans - according to a prediction by investment bankers Macquarie Group.

The cocoa shortages will be among topics discussed by the International Cocoa Organisation at its first summit in Abidjan, Ivory Coast, next week attended by 41 consuming and producing nations.

Topics:  chocolate



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