Volatile Cocoa, Sugar Prices Smack Confectionery Industry

Billy Roberts

February 1, 2024

Key Points

  • Retail chocolate candy prices are 17% higher than they were just two years ago per Euromonitor. According to USDA, the price of sweets overall increased 9.2% this year alone.
  • While year over year dollar sales for the chocolate confections category grew 6.4% by mid-December 2023, volume sales fell 5%. 
  • Candy manufacturers face cocoa prices that are at a 46-year high. Sugar prices have mellowed back to year-ago level, as supplies have increased slightly. 
  • Chocolate brands have little choice but to charge higher prices and risk volume sales. 
  • With consumers cutting back on discretionary spending these days, the chocolate confectionary category is likely to see low single-digit dollar sales declines, with similar rates of volume losses in the near term. 


Valentine’s Day shoppers with chocolates on their list are in for sticker shock, continuing what they saw at Halloween and Christmas. Thanks to distinctly higher wholesale costs for sugar and particularly cocoa, consumers are paying 9.2% more than a year ago for confections, outpacing broader inflation. Chocolate prices have already surged 17% in the U.S. over the past two years, per Euromonitor International. Not surprisingly, volume sales for the chocolate confections category are 5% below their year-ago levels (for the 52 weeks ending Dec. 17, 2023), according to Circana data. 

Companies have relied upon price increases to keep dollar sales growing, and have seen notable declines in volume sales — a theme common to much of consumer-packaged food and beverage over the past year-plus. Mondelez’ chocolate sales volume growth weakened substantially this fiscal year. Similarly, Hershey sales declined in 2023, with company earnings calls pointing to further volume declines in the second half of this fiscal year. Nestle SA noted that higher ingredient prices, particularly for cocoa, may mean more price increases. 

Cocoa cost increases coincided with sugar price surge

Cocoa prices have trended higher for much of the past year. Cocoa prices are 14.8% ahead of levels even as recently as Nov. 1, 2023; they are 64.7% ahead of one year ago. Early 2024 has seen another spike in prices, surpassing $4,500/MT as of Jan. 26, a 31.1% jump in the past six months alone. New York futures hit a 46-year high in September based on concerns about global cocoa production levels. Cocoa production in west Africa — which accounts for almost 70% of supplies — remains below even reduced estimates. Despite an increase in global cocoa production in 2022-23 (forecast to increase 2.4% year over year), the International Cocoa Organization (ICCO) projects a global cocoa inventory decline in 2022-23 of 146,000 tons. As such, cocoa prices are expected to remain relatively high, but even inflated prices have done little to deter consumer demand.

Sugar prices now hover around their year-ago levels — and 23% less than where they stood in mid-November. The USDA in its World Agricultural Supply and Demand Estimates report has forecast higher U.S. sugar production in 2023-24, lower imports and just slightly higher total supply and ending stocks. This improved supply outlook has eased some of the pressures that had driven dramatic growth in sugar prices as recently as November. Nevertheless, supplies remain relatively tight, and prices will remain high, just without the dramatic increases that continue to plague cocoa futures.

Will higher prices permanently dampen sales volume?

Nearly three quarters of consumers (74%) regard confectionery items as affordable treats, per the National Confectionery Association. However, nearly half (45%) also indicate they have implemented money-saving measures, such as switching between types, brands, pack sizes and retailers, to stretch their candy dollar. This shift in consumer behavior appears to have sticking power, with even consumption levels beginning to take a hit. Statistica research finds the pandemic-era surge in per-capita chocolate consumption was temporary, projecting a slim drop in the consumption rates annually through 2028. 

Dollar sales of chocolate confectionery have grown, largely owing to higher prices, which appear to be stifling the segment's overall volume growth. Candy & Snack Today data from Circana noted the category’s 52-week dollar sales ending June 19 increased 9.5%, though this was actually down from double-digit growth in recent years. More-recent Circana data continue to demonstrate dollar growth in the category, though slower and the result of increased prices and at the expense of unit sales. For the 52 weeks ending Dec. 17, 2023, chocolate candy dollar sales were 6.4% ahead of one year prior, 15.3% ahead of two years ago. However, those higher dollar returns came amid pronounced declines in volume sales, which fell 5% and 9.5%, respectively.


The cocoa issues come at a particularly challenging time for manufacturers, considering general growth in sugar prices over the past three years. Heightened cocoa futures remain near record levels and show little signs of any significant retreat. In fact, the cost increases seen for cocoa have outstripped the easing seen in some other raw materials, including sugar, and cocoa prices are likely to remain elevated until a new crop comes to market in late 2024. As such, further pricing adjustments for chocolate confectionery are likely throughout the course of this year making any rebound in consumer engagement in the category unlikely. Higher prices will take a greater toll throughout the course of 2024 and likely lead to low-single-digit declines in dollar sales. Expect unit sales to exhibit a similar decline until pricing stabilizes and consumer discretionary incomes rebound. 


Disclaimer: The information provided in this report is not intended to be investment, tax, or legal advice and should not be relied upon by recipients for such purposes. The information contained in this report has been compiled from what CoBank regards as reliable sources. However, CoBank does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this report. In no event will CoBank be liable for any decision made or actions taken by any person or persons relying on the information contained in this report.


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