NEW YORK (BLOOMBERG) - Americans are eating less chocolate as the sweet treat gets more expensive.
With inflation hitting US shoppers at the fastest pace in decades, indulgences like candy are becoming a casualty. Chocolate sales have been dropping for three straight quarters. Volumes sold at retail shops in a recent 13-week period slipped 6.3 per cent, while prices rose 11 per cent from a year ago, according to Chicago-based market researcher IRI.
Cocoa markets are tanking on the decrease in chocolate bingeing. Futures prices in New York reached the cheapest level this year on Wednesday (May 25).
"Bullish supply factors have failed to offset a serious threat to demand," said Chicago-based Hightower Report.
It is not just the United States that is abandoning its sweet tooth. Across the Atlantic, European Central Bank vice-president Luis de Guindos on Wednesday said the euro area will face "much lower growth" than previously expected. Europe is the world's largest consuming region of chocolate.
Meanwhile, China is forecast to miss its official growth targets as its Covid-19-zero policy hammers its economy. Asia's chocolate eating has increased the swiftest in recent years.
Retail prices are rising partly because of higher costs for chocolate makers including Hershey. Supply chain chaos caused by the pandemic and now the war in Ukraine have been spilling over into commodity markets including cocoa.
Citigroup expects a "very moderate surplus" in world cocoa balances in 2022 to 2023, following a deficit in the current season ending in September. The bank has also warned about the impact on demand coming from the war in Ukraine and China's lockdowns.
In another sign of slack demand, reserves of cocoa, the raw material that goes into chocolate making, are rising at ports.
The July contract slid as much as 1.9 per cent to US$2,395 per tonne on ICE Futures US, the lowest for a most active contract since early December. Lower prices reduce cost pressures for chocolatiers like Hershey and Mondelez International.
In other soft commodities, arabica coffee and cotton rebounded from losses a day earlier, while raw sugar was little changed.
