Americans are still willing to spend on chocolate, even as higher prices mean that they’re getting less for the money.
Purchases of chocolate confectioneries are expected to climb 5.8% this year to reach almost $26 billion, according to data from researcher Euromonitor International Ltd. Volumes are forecast to rise 1.9%. That’s after a 2.7% drop last year that was the biggest since 2009.
Buying is proving resilient thanks to a phenomenon known as “revenge living,” said Carl Quash, an analyst at Euromonitor. Consumers are willing to spend on areas of their life that were impacted in the pandemic, like travel and dining. And while lockdowns obviously didn’t make it impossible to eat candy bars at home, the everyday luxury is still getting swept up in the trend.
So far, higher chocolate prices are the main factor leading to the bigger sales numbers. Data for the 52 weeks ended May 27 showed dollar sales up about 10% from the year-earlier period, even while total volume was down about 4%, according to Nielsen data. People are ready to pay more for their treats, saving the industry from a recession-like crash, such as the one seen in 2009-2010.
Chocolate “plays a really special role for people — as an indulgence, as a treat and as a reward,” said Nick Graham, global head of insights and analytics at Mondelez International Inc., the maker of Oreos and Cadbury. “The emotional value that the category brings to consumers is one that justifies the additional price increases.”
It’s the latest sign of a splintering in the US economy that’s keeping the Federal Reserve on track to keep raising interest rates, despite investor concerns over a slowdown. A solid job market has kept consumer confidence strong, and the US service sector is expanding, led by sectors like hotels, dining and entertainment. But meanwhile, companies like Levi Strauss & Co. are struggling with price-sensitive shoppers.
Consumers are “making up for lost time,” said Quash of Euromonitor. “They couldn’t go out and travel, do activities. And a lot of these things are really conducive for chocolate moments.”
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The demand is helping to shield chocolate makers from rising cocoa costs amid shrinking stockpiles. Cocoa traded in London, the global benchmark, has jumped about 20% this year and is trading near a 13-year high. Prices traded up about 0.7% on Monday.
An El Niño weather pattern risks further disrupting global production, and top growers Ivory Coast and Ghana have already sold a large part of their crop for next season.
“Obviously, it’s a big challenge for the coming months, and we are monitoring the situation with a lot of attention,” said Catherine Bertrac, a senior vice president at Ferrero SpA who works on the Kinder brand.
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Some health-conscious shoppers are also growing more worried about sugar consumption. In response, chocolate makers are marketing products like bite-sized bars for portion control.
Mondelez is “really responding to the need and desire that consumers have,” said Graham. “They want the chocolate experience — they just want it a more controlled way.”
(Updates with Monday’s cocoa trading in eighth paragraph)