Will a bar of chocolate cost 200 roubles?

According to the study of ROIF Expert Marketing Agency, Russian cocoa-beans market in 2010 was growing both in stock and in value. The current situation on the global cocoa beans market was commented by Olga Kononova, the agency chief analyst.

The chocolate industry primary goods prices are growing in the market, why, do you think, it is happening?

The unprecedented cocoa beans and cocoa semi-processed products’ prices resulted in 28% increase of Russian cocoa beans market value ($669,76 mln) by the end of 2010.

Despite the main price-forming factors, specifically the stabilization of Côte d’Ivoirepolitical situation and The International Cocoa Organization (ICCO) forecast data, which shows the excess of cocoa beans supply on the global market in 2010/2011, the price-dropping is going at a slow rate. And the return to the 2007 level, when cocoa beans average annual price was $1.952 per ton, is unlikely to happen.

Taking into account the fact that the market structure of cocoa products on the basis of quantities is specified by two leading cocoa-importing countries: Côte d’Ivoire and Ghana (32% and 16% respectively, total 48%), it can be stated, that Russian cocoa products’ market depends on these two countries. Any change in their domestic and foreign policy will inevitably lead to both the cocoa products increase on the Russian market and the change of the marketing component of the main market players.

What can you say about the prospects of Russian chocolate manufacturers?

Under the circumstances the prospects are rather predictable: either to maintain the former level of chocolate prices, using cheaper alternative ingredients, which will result in quality decrease, or to increase the prices, as cocoa products’ costs are up to 40% of the total input. There is one more option to decrease the expenses – buying our own cocoa plantations, as United Confectioners Holding has just done, they bought the cocoa-bean plantation in Côte d’Ivoire.

Judging from prior experience, it is very hard to explain to Russian consumers the increase in prices. They tend to blame the manufacturers, who, as they think, make their profit at people’s expenses. Is it possible, that Russians will refuse to buy chocolate at higher prices?

I believe such a scenario is next to impossible. There could be some drop of consumption per capita, but no complete rejection of chocolate. Moreover, besides elite sorts of chocolate, containing up to 90% of cocoa, there are cheaper kinds, such as milk chocolate or filled chocolate. So, the customers have the price option and will make their own choice.

To maintain the prices the manufacturers use cheaper ingredients to lower the cost value. Do you think it is the way out for national chocolate manufacturers?

For those who care for their public image, and are long-term prospect-oriented such strategy is not a way out.

And how do European manufacturers treat this situation?

Already this year the Swiss Nestle S.A. corporation, which is the largest global food products manufacturer, announced that due to the significant price increase for cocoa beans, the prices for chocolate will be growing too, and the price growth will continue up to 2024.

Can the situation change and prices of cocoa beans and semi-processed products for chocolate manufacturing drop? Under what conditions may this happen?

Till June we have been observing the gradual adaptation of prices reaching the level of $3016 per ton of cocoa beans and in July the price went up to $3167 per ton.

Sourse: Confectionery SFERA/Bakery