The “Great Cocoa Plague” Sends Prices Up 104% (Apparently, Chocolate is The New Lumber)

If you thought the creepy neighbors halloween party was the scariest thing you’d face on October 31st, think again. The real nightmare? Your candy stash (the one you’ve been eyeing to "borrow" from your kids, obviously). If their trick-or-treat bags are looking suspiciously light on chocolate, it’s not a fluke. Cocoa prices have doubled since the start of 2024 (because apparently, chocolate is the new lumber). Meanwhile, Hershey’s and Mars are performing financial gymnastics just to keep their stock from pulling a full-on horror show.

Cocoa prices have shot through the roof, thanks to weather issues that sound like they were dreamed up in a Final Destination movie. El Niño, droughts, and a creepy-sounding fungus called black pod have hammered West Africa’s cocoa production, where more than 70% of the world’s cocoa comes from. According to Wells Fargo’s Agri-Food Institute, we’re looking at a 22.4% drop in production in Ivory Coast alone this year.

Wall Street is having its own meltdown over this cocoa catastrophe. “Warehouse stocks are at 50-year lows, and they’ve been shrinking for 15 straight months,” says David Branch, sector manager at the Agri-Food Institute.

So, what’s the plan for Hershey and Mars? Well, they’re playing a fun game called “shrinkflation” (aka giving you smaller candy bars for the same price—lucky us). They’re also pivoting hard into non-chocolate products because, surprise, making gummies and licorice doesn’t require expensive cocoa. Hershey’s, for instance, has ramped up its production of Jolly Rancher Ropes and Shaq-A-Licious gummies (yes, Shaq is officially part of your Halloween now). They’re banking on these cocoa-light treats to help cushion the impact of rising costs.

Despite cocoa prices shooting up, Hershey’s stock is holding steady. Over the last year, Hershey’s stock has only dipped 1%, while Mars, which is privately held, is using its candy empire to double down on Skittles. Investors are keeping a close eye on Hershey, as their pivot to non-chocolate products and strategic price hikes have kept their revenue flowing. Mars doesn’t have to worry about the market’s watchful eye, but rest assured, they’re making moves behind the curtain, quietly adjusting to the cocoa crunch by leaning on their non-chocolate lineup.

Even though your favorite chocolate bars are shrinking (literally, thanks to shrinkflation), Hershey and Mars are hoping their stock prices won’t. Hershey’s is strategically managing the cocoa crisis by reducing the amount of actual chocolate in their products, adding nuts or other fillers, and raising prices where they can. 

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Stocks.News does not have a position in the companies mentioned in the article.