Cocoa futures are the highest in more than a decade. - Bloomberg
JAKARTA (Bloomberg): Chocolate’s allure may be dimming for Asian consumers.
Soaring cocoa prices are beginning to dent demand increases in one of the biggest growth markets for the sweet treat, according to top agricultural commodities trader Cargill Inc.
Asia’s demand, which has, in the past, grown in double digits, could slow to lower single digits, Francesca Kleemans, Cargill’s managing director of food solutions for Southeast Asia, said in a interview on the sidelines of an industry conference in Bali.
Cocoa futures are the highest in more than a decade. While chocolates, especially of the premium variety, are usually seen as inflation-resistant, demand could also be hurt by a cost of living crisis squeezing consumers across the world.
Global cocoa grindings - seen as a proxy for demand - dropped in the second quarter as factories grappled with weaker margins and costlier raw materials used in making chocolate.
With the cocoa market set for a third year of deficit, the availability of quality beans for processing has made the possibility of a rebound in grindings in the third quarter quite unlikely, Kleemans said.
Still, Asia remains the "future of the demand of cocoa and chocolate” longer-term, with appetite for the treat expected to expand in countries like India, China, Indonesia, Thailand and the Philippines.
Growth, however, will occur in ups and downs rather than in a linear manner, she said. "This situation will probably take a couple more quarters to turn around.”
- ©2023 Bloomberg L.P.
