Sweet business turns bitter as cocoa prices hit record highs

The global cocoa market is experiencing an unprecedented surge in prices, placing significant pressure on chocolate manufacturers worldwide – including artisan producers like Malta Chocolate Factory. With cocoa prices more than doubling in the past year and further increases expected in 2025, the company is facing serious challenges in maintaining affordability while preserving product quality.

Speaking to BusinessNow.mt, Bevan Marwick – General Manager at the Malta Chocolate Factory – explained the impact these cost increases have had on the business.

“Our business has been massively affected by the recent surge in cocoa prices. We produce over 17,000 kilograms of chocolate products annually, and we’ve seen cocoa prices increase several times over the past 12 months – more than a 100 per cent rise – with more increases expected next year.”

The challenges of rising cocoa costs

The sharp increase in cocoa costs has limited the company’s ability to experiment with new product lines, as the financial risk of waste has become too high. Additionally, catering to niche clientele has become increasingly difficult, as the cost-effectiveness of speciality chocolates has diminished.

“We can’t be as flexible with expanding our range in the hopes that new ideas will sell better. We also don’t want any wastage, as everything has become so expensive. This also affects our ability to cater to more niche clientele, as it’s just not cost-effective.”

To manage the rising costs, chocolate manufacturers worldwide are adapting their production strategies. One common approach is reducing the amount of chocolate used in products by incorporating inclusions such as nuts, which bulk up the product while maintaining a stable retail price. Another method is shrinkflation – reducing product sizes while keeping prices the same.

Some companies, Mr Marwich noted, have also resorted to replacing cocoa butter with cheaper alternatives such as palm oil. However, Malta Chocolate Factory remains committed to maintaining the integrity of its chocolate, even as it faces financial strain.

Passing on costs to consumers

Despite efforts to absorb price increases internally, Malta Chocolate Factory has been forced to raise prices on its core products.

“We are an artisan manufacturer and we continue to operate with very high volumes. However, most recently we ourselves had to increase our prices on our core products, as we couldn’t absorb the increases in-house anymore. If we could keep prices the same, we would.”

Mr Marwich highlighted the importance of consumer awareness regarding the reasons behind rising chocolate prices, particularly the role of climate, supply chain disruptions, and geopolitical factors.

“The majority of consumers don’t understand what’s happening, and they need to realise these price increases are happening everywhere. Sometimes it’s worth researching why these increases occur. Cocoa only grows in certain areas, and weather conditions, demand, and politics all play a role in these price hikes.”

The future of chocolate

While some fear that chocolate could eventually become a luxury item reserved for the wealthy, Mr Marwich remains cautiously optimistic.

“We are hopefully way off chocolate becoming only for the rich. In the meantime, consumers should read the label, check the ingredients, and see where the product is made.”