Has anyone noticed an increase in bar prices? Haven't seen it that as much in shops as i have with distributors.

Those in the choc business must be feeling the pinch i bet... and putting up their prices too?

In the original post you commented on the effect of the weakening dollar in the U.S. It is a mixed issue. I work in a bakery that also makes jams and jellies, and chocolates. We have found that as the dollar weakens, the percentage of foreign tourists increases. Also as gas prices go up we get more people within a day's drive of the store. People who normally might take a week's vacation to someplace distant are instead taking weekend trips. So at least in the beginning if you are dependent on tourism you might see an increase in income.

Just some food for thought.

quote:

What I *hope* doesn't happen, but if the way other markets seem to go is true for chocolate as well, may be inevitable, is what I'll call "supply hogging". Here's what happens. Demand for a particular good goes up, outstripping supply. That drives up the price, which is fine, but it also causes the rise of a subculture in a particular country or region or city to become irrationally obsessive, paying any price above and beyond market price in order to secure their supply, but much more importantly, their image in the context of their social group.

Before long virtually *all* of the supply goes to that one localised area, regardless of the demand elsewhere, because the prices that it can be sold for in that one area are so disproportionate to anywhere else in the world. Everyone else is entirely shut out, and furthermore, in the "hot" region, the supply is then often used in wasteful, extravagant ways that serve little purpose other than to magnify the social standing of the person using the item so indiscriminately. Moreover, a lot of the rest is carefully hoarded, not even touched. The net result is that the actual *value* of the item so sold - in this case if it were chocolate it would be in the sensory pleasure of really good chocolate - is destroyed - regardless of the *profits* the manufacturers, distributors, etc. reap, and furthermore *all* of that value is systematically denied to the rest of the world in a way that is disproportionate to the relative demand in that rest of the world.

Another way this can happen (not necessarily probable in a chocolate context but not inconceivable either) is that a particular industrial application generates extraordinary demand for a good, making it unavailable to other industries or for that matter to the consumers. Cocoa butter is a classic example, given it is also used in cosmetics as well as in chocolate. IIRC, the quality chocolate industry actually has the disproportionate demand, leaving the cosmetics manufacturers holding th bag, so to speak, but it's an inequity in the system.

I find it interesting that there is so little apparent demand for quality cocoa. One does not often find origin cocoa powders or for that matter anything beyond a few commodity brands, and this is, I think, the source of the supply imbalance. It seems a bit strange to me because there are many applications in which cocoa is better than chocolate, and yet one finds so few chocolate manufacturers making any attempt at decent cocoa powder. Of course this doesn't have an impact on industrial cocoa butter production but I suspect similar inequities of demand exist there.

Where I think world economic problems will have a major impact on chocolate is at the beginnings of the supply chain - in the plantations and the factories. Suddenly, there will be much less investment, both in new and/or improved plantations, and in production equipment, facilities, pay for skilled workers, etc. The farmers are going to be very hard hit, many of them going under, while meanwhile factories will lie idle or underused, and many skilled cocoa workers might be forced by economic necessity to leave the business for good. In the end this might mean a decline in industry knowledge and skills passed down from generation to generation, so it's conceivable that in the long run quality of chocolate will decline.

Alex Rast
Alex_Rast_Alternate@hushmail.com

http://bittersweetcafe.blogspot.com
http://www.bittersweetcafe.com

I'd agree with Sebastian's comment above--being a chocolate maker, confectioner or baker is probably not the worst idea during a recession...

http://bittersweetcafe.blogspot.com
http://www.bittersweetcafe.com

A good point on chocolate consumption being an "affordable" luxury rather than the big-ticket items. I hadn't thought of that but I quite like the idea of people eating more chocolate as an economy deteriorates: it works for me from an economic perspective as well as a personal psychological one. [:D]

The "ratio issue" you refer to is also interesting - I've often thought about the need for extra ccb in production and wondered how producers deal with the excess ccp and what happens when the demand for it isn't there.

As for the likely increases in demand in the future (from, say, China & India) - do you think this will drive demand in bulk beans or fine beans (using very general/stero-typical definitions here) or both? Is it possible that bulk beans will be the first to see the pickup in demand (given its lower pricing point) or are the two driven in tandem?

From the supply side, do you know if moves are underway to expand cocoa growing? (eg., new territories trying to grow cocoa) or make it more efficient? - if even possible (eg., better use of the land that currently grows cocoa)

i think we'll likely see rather large price increases in chocolate in the coming years - think about it - how much was a candy bar when you were a kid, and how much is it now? the prices are very similiar, so even though the cost to mfr and distribute has increased, it's been difficult to pass those costs on to consumers. world cocoa production's not increased significantly, although consumption has, and now new entry markets are emerging (china, india, etc) so we can expect there to be sourcing issues tomorrow when none exist today. if demand outstrips supply, up goes the price.

then there's the ratio issue - in order to make chocolate, most large producers require cocoa butter. in order to produce ccb, you need to produce cocoa powder. if the demand for ccb is there but the demand for ccp isn't, the ratio of the two is skewed and production will likely be cut back if the margins on the ccb don't cover the production of the excess ccp...

Where I think chocolate may suffer is, as also mentioned above, people may choose to cut discretionary spending - and for many people good quality chocolate is probably a "luxury" item that can be cut if times get difficult (as opposed to say the bread from the baker - also going up in price but still required and will be bought)

So while I think costs are rising for producers of chocolate, I think its moreso the potential necessity to cut back on luxury items/discretionary spending which could see chocolate demand fall.

I only make the distinction because knowing the cause of reduced sales may offer an insight to potential remedies for chocolate companies. Eg., "how do I capture a larger portion of a consumers discretionary spending (when that spending is shrinking)?" is a different question to "how do I keep costs down?".