Listen up, chocolate lovers: your M&M’s are about to cost more.
Mars and Hershey’s, two of the leading U.S. chocolate manufacturers, recently announced 7 and 8 percent increases in product prices respectively, reported Slate magazine.
Hershey, which is behind bars from Kit Kats to Reese’s, was the first to make the move last week. Mars followed on July 24 with its own announcement, which will affect the likes of Snickers, M&M’s, Dove and Twix.
Among the companies’ reasons were a rise in ingredient, transportation and manufacturing costs; the price of cocoa beans, one of chocolate’s key ingredients, has hiked up 18 percent already in 2014, Slate said.
“Over the last year key input costs have been volatile and remain at levels that are above historical averages,” Michele G. Buck, Hershey’s president for North America, told The Wall Street Journal on Friday, July 25.
The chocolate world has been abuzz for several years about changes in the global industry.
One of the largest issues? The cocoa bean.
More than 90 percent of the world’s cocoa is grown by small-scale farmers, with Africa leading the way as one of the largest exporters, The Guardian reported. Trees have been affected by changing weather patterns and other conditions, meaning healthy growth is becoming more difficult.
Many farmers are also paid extremely low prices for their beans, which makes it hard to care for the trees and stay in the industry, said The Guardian. With fewer cocoa farmers, raw ingredients will be harder to find.
Local chocolatiers haven’t been affected too much yet, but the industry is a growing concern.
“It’s the perfect chocolate storm,” said Mark Tarner, president and owner of South Bend Chocolate Company. He also cited the lower U.S. dollar exchange rate, rising labor costs and higher dairy prices as contributors.
DeBrand Fine Chocolates in Fort Wayne compares the shift to ever-changing gas prices.
“Prices have always fluctuated and like many companies, we’ve have had to raise prices a bit over the years, but quality will never be sacrificed,“ president Cathy Brand-Beere said. ”We will try to keep the retail price as low as we can while keeping the highest quality chocolate.“
This commitment is an important one, as there are more people craving the confection than ever before. Tarner said sales of chocolate are at historic levels. The sweet has raked in $16.2 billion in the U.S. this year, a commodity that is “inelastic,” research analyst Amal Ahamd told The Wall Street Journal. It’s one treat people are willing to pay for, whatever the cost.
“Last time [chocolate sales] were this high, Jimmy Carter was in office,” Tarner said.
Elsewhere in the world, India’s chocolate market is estimated to grow 21 percent in the next four years; Russia’s sales may climb 45 percent by 2016; and China’s love for the confection has grown 40 percent every year since 2009, reported NBC in 2013.
But it’s necessary to keep in mind that the scarcity of ingredients, coupled with the increase in demands for good chocolate, means the hot commodity may not be as easy to get ahold of in the future – unless the industry, from grower to buyer, makes some adjustments.
South Bend Chocolate Company currently gets raw chocolate materials from a supplier in Chicago, and doesn’t foresee a change in prices for now.
“Our company is very diverse,“ Tarner said. ”We have restaurants, ship chocolate overseas, use many local ingredients, and have stable labor. Indiana is a good place to do business. I think we’re going to weather this storm.“
How much would you pay for a bar of chocolate?