Valentine's Day Chocolate This Year Isn't So Sweet As Cocoa Inflation Tops 100%
Portfolio Pulse from Piero Cingari
Cocoa prices have surged over 100% in the past year, reaching over $5,500 per tonne due to supply challenges in West Africa, particularly from Ivory Coast and Ghana. This increase is attributed to diseases and adverse weather conditions, along with rising freight rates amid tensions in the Red Sea area. The U.S., being the largest chocolate market, is affected, with companies like Mondelez International Inc. (MDLZ), The Hershey Company (HSY), and Lindt & Sprüngli AG (LDSVF) potentially facing higher costs.
February 14, 2024 | 9:30 pm
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NEGATIVE IMPACT
The Hershey Company may experience increased production costs due to the cocoa price hike, affecting its financial performance.
The Hershey Company, being a leading confectionery manufacturer in the U.S., will likely face increased costs due to the surge in cocoa prices. This could lead to higher production expenses and potentially affect the company's financial performance if these costs cannot be effectively managed or passed on to consumers.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Lindt & Sprüngli AG may see its production costs rise due to the increased cocoa prices, potentially impacting its profitability.
Although Lindt & Sprüngli AG's primary listing is outside the U.S., it is still affected by global cocoa prices. The significant increase in cocoa costs could lead to higher production expenses for its premium chocolates, potentially impacting profitability if these costs cannot be absorbed or passed on.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
Mondelez International Inc. faces increased costs due to the surge in cocoa prices, potentially impacting profit margins.
As a major chocolate manufacturer, Mondelez's costs are directly impacted by cocoa prices. The significant increase could lead to higher production costs, potentially squeezing profit margins if the company cannot pass these costs onto consumers.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80