Surging cocoa prices squeeze Luxembourg chocolatiers

Global cocoa prices have skyrocketed this year, and though Luxembourg chocolatiers make do, the change will leave a mark on their work and consumers.

“The global cocoa price has increased by more than 250% in one year. It is worth noting that it had already increased by 200% the previous year,” Alexandra Kahn, director of the Genaveh chocolate brand, said. “This is unprecedented in the history of chocolate. It is becoming a true luxury product!”

At Genaveh, cocoa beans come from Peru for dark chocolate. Milk chocolate is produced from beans coming from São Tomé and Príncipe, an island located off the west coast of Africa.

“For Peruvian beans, global demand is increasing, while at the same time, global production is recording a decline: climate conditions are unfavourable with droughts and high temperatures,” Kahn said.

The cost surge has not changed Genaveh’s recipes but has affected the company’s margins and, as a consequence, store prices. For the beans used in milk chocolate, the director has to deal with a price increase of more than 20% for 2024.

Chocolate could cost “50 to 100% more”, Kahn said.

Other raw materials such as sugar, cocoa butter, butter, milk and nuts are also costing businesses more.

For Genaveh, who consider their products “a pleasure product, a gift product,” “we will continue to do what we do best and innovate, but obviously, with all these increases, we are plagued by many questions,” Kahn said.

Changing recipes not an option

Swapping out ingredients to produce cheaper chocolate is also not an option for chocolatier Lola Valerius.

“We cannot skimp on the quality of the product or on the taste. We have to increase prices; all suppliers are raising their prices, and it is the same whether you are a small or large business,” said Valerius, who has a shop in Esch-sur-Alzette.

Her products are guaranteed to be “100% artisanal,” but the professional relies on couverture chocolate imported by her suppliers, meaning that the chocolates are made on site, but the initial raw material is imported.

Prices have gone up for chocolatier Lola Valerius © Photo credit: Gerry Huberty

“Cocoa butter went from nearly 13 euros per kilo to 41 euros in less than a year. For some chocolates, it’s the same story: white chocolate used to cost around 16 euros, and now it is over 30 euros,” Valerius said.

In addition, the sector has to deal with shortages. Harvests are increasingly subject to climatic hazards, so supply is less plentiful while demand is ever stronger.

“Our suppliers no longer accept new clients to be able to serve their current clients,” Valerius said.

Buying at the source

Gabriel Mjahed from Dudelange works as close as possible with small producers. His current main cocoa bean supplier is in Madagascar.

By sourcing directly from the producer, Mjahed aims to get to know his producers better, pay them better, see the plantations and make sure they don’t have a negative impact on nature or the people, and avoids being subjected to the cocoa market prices as much.

“Not counting raw materials, the increase that affects us is transportation. On the other hand, what might come into play regarding the rise in cocoa prices is that industry giants are starting to approach small cocoa producers to get them to sell their cocoa. They claim the amount they offer is higher. The problem is that there is no longer enough cocoa in the world,” said the chocolatier from Dudelange.

To minimise the impact, Mjahed bets on buying his materials in bulk in advance.

“We are in December, and if I manage to buy all my cocoa for 2025 now, I will benefit from the current price, and if there is an increase, I am protected,” Mjahed explained, adding that for this, he needs a cash flow of €50,000 to €100,000 to plan ahead.

Rethinking the future of chocolate

Like Mjahed, famous Luxembourg chocolate brand Oberweis processes cocoa beans directly and makes its chocolate from scratch for 25% of its products and its “bean-to-bar” chocolate bars.

“Thanks to this process, we can manage the roasting ourselves and find the best composition. The next step will be to develop a less fatty and sugary chocolate,” said Jeff Oberweis, co-director of Oberweis and chocolatier.

At Oberweis, chocolate prices have increased by 10 to 15%. “There was the war in Ukraine, which resulted in sugar prices increasing to over 1 euro per kilo. Now, the price of sugar has come down, but it has never returned to 0.40 euros,” said Oberweis.

Chocolate products are becoming more expensive in part due to climate change  © Photo credit: Shutterstock

Climate change complicates production

Cocoa trees only start bearing beans after five years, but global warming brings along weather conditions and diseases that threaten the plants.

To meet the ever-growing global demand, producers have begun planting a hybrid cocoa tree variety – CCN51 – which is said to be more profitable and yields more beans. Industry giants have been pushing producers to switch to CCN51.

How this will affect the trade remains to be seen.

Oberweis said of these beans: “I don’t have a firm opinion on this. I’ve read differing views about hybrid cocoa trees: some claim that even if the tree is hybrid, it’s like a pollinator tree, and after five years, the tree changes anyway.”

What the future of chocolate will look like remains to be seen, but chocolatiers can expect raw material prices to continue to fluctuate.

“In some of our recipes, we use vanilla, and I’ve already seen prices as high as 800 euros per kilo, but eventually, it came back down to around 400 euros,” Oberweis said.

(This article was first published on Virgule. Translation and adaptation by Tracy Heindrichs.)