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Cocoa prices are soaring. Will it soon become a luxury good?

Recent months have seen significant price rises in the cocoa market, with the value in the United States now exceeding 3200 US Dollars per tonne (approx. 12700 PLN). [1] This marks a new all-time high, the highest in the last 7 years. [2]

There is a reason

The upward trend currently occurring in the cocoa market is mainly caused by an excess, unforeseen demand for the product. The phenomenon was first observed at the end of the previous year, and it continues to this day. The additional reason for the price increase is also due to difficulties met in production of the main exporter, Ivory Coast, which harvested less product than expected – this was caused by unfavourable weather conditions – heavy rains and a reduced amount of fertiliser used in the process. [2]

Centralisation –- source of the problem

The cocoa market is currently very highly concentrated in terms of production. West African countries are responsible for approximately 80% of the global production of cocoa seeds, with Ivory Coast leading the supply chain. Such highly centralised production tends to have very high volatility, with any disruptions, be it political, climate or other regional issues having direct impact on the global price of the commodity. Fortunately, the price increases are not permanent. Technically, the cocoa price quotation is in an overbought area, meaning that it is susceptible to a price decline. [2]

The past of the delicacy – how did it find its way to us?

In Poland, cocoa appeared on our tables thanks to the expeditions of Christopher Columbus, who brought back with him cocoa beans discovered on his voyage to America from Spain in the year 1502. By the end of the 16th century, Spaniards were already head over heels in love with the chocolaty beverage and the fondness for this delicacy quickly spread throughout the entirety of Europe. Although at first Europeans were unsatisfied with the bitterness of the traditionally prepared cocoa drink, they quickly began experimenting with it, mainly by sweetening it with sugar, adding cinnamon or other spices. It took quite a long time from the discovery of the cocoa bean to the production of chocolate we know today. It took more than 300 years for the chocolate breakthrough to occur, as it was only in 1828 that a Dutch chemist invented the cocoa press and an innovative method of processing cocoa that allowed the product to become even more popular and easily available. [3]

Cocoa leadership

Poland holds a leading place among importers of cocoa beans. The countries from which we import the largest amount of cocoa are the Ivory Coast, the Netherlands, Germany and Ecuador. [5] A Polish person consumes an estimated 5.5 kilograms of chocolate a year, making us considerable chocolate lovers. [6]

Bibliography:

[1] Exchange rate of the USD-PLN relation from 17.07.2023

[2] ,,Ceny kakao na 7-letnich szczytach” – Dorota Sierakowska, commodities analyst, DM BOŚ, 19.06.2023 r., Puls Biznesu, URL: https://www.pb.pl/ceny-kakao-na-7-letnich-szczytach-1188325

[3] ,,Historia kakao” – Chocante, 21.11.2023 r., URL: https://chocante.pl/kakao-historia/

[4] ,,Kakao – proces jego produkcji wcale nie jest łatwy” – Katarzyna Rapczyńska-Lubieńska, 12.12.2019 r., WP, URL: https://dobreskladniki.wp.pl/kakao-proces-jego-produkcji-wcale-nie-jest-latwy

[5] ,,Import kakao” –  Katarzyna Dworakowska, 02.03.2017 r., Seaoo, URL: https://www.seaoo.com/blog/import-kakao/

[6] ,,Polacy liderem w eksporcie czekolady. “Rynek ma się dobrze”” – KKG, 06.04.2023 r., Money.pl, URL: https://www.money.pl/gospodarka/polacy-liderem-w-eksporcie-czekolady-rynek-ma-sie-dobrze-6884424101833632a.html 

Jan Pawłowski
Bio:
Jestem studentem zarządzania na Wydziale Zarządzania Uniwersytetu Warszawskiego, na co dzień wkładam dużo pasji w rozwój osobisty. Interesuję się siłownią, motoryzacją, kulinariami, grami komputerowymi oraz wszelakiej maści ciekawymi (oraz drobnymi, bądź nie) dla mnie faktami naukowymi i artykułami.
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Jan Pawłowski

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