Rising Olive Oil, Cocoa Prices Challenge Specialty Chocolatiers

From olives to cocoa beans, extreme weather events world­wide have con­tributed to ris­ing prices for kitchen sta­ples and lux­u­ries.

The price of cocoa reached a record-high $9,865 (€9,244) per ton in April 2024 and has since fallen slightly to $8,380 (€7,935). Before September 2023, cocoa prices had not exceeded $3,600 (€3,300) per ton in more than 30 years.

Global cocoa prices have increased due to var­i­ous fac­tors, includ­ing a failed crop due to bad weather, bean dis­ease, smug­gling, mar­ket spec­u­la­tion and ille­gal gold min­ing, which have reduced pro­duc­tion and the avail­abil­ity of beans in Ghana, the world’s sec­ond-largest pro­ducer.

Meanwhile, drought and high spring tem­per­a­tures across the Mediterranean basin in 2023 and 2024 resulted in con­sec­u­tive years of poor olive har­vests and decade-low olive oil pro­duc­tion totals. The con­flu­ence of fac­tors resulted in the International Monetary Fund’s bench­mark olive oil price hit­ting record highs in January at $10,281 (€9,446) per ton and remain­ing his­tor­i­cally high.

Rising cocoa and olive oil prices have hit a niche mar­ket of olive oil choco­latiers, includ­ing K + M Chocolates.

Founded in Napa, California, in 2017 by French Laundry chef Thomas Keller and Tuscan olive oil pro­ducer Armando Manni, the com­pany makes its choco­late from a care­fully bal­anced recipe that includes extra vir­gin olive oil and cocoa pow­der.

Their method pre­serves the rich­ness of the cocoa bean and pro­vides health ben­e­fits by using extra vir­gin olive oil instead of cocoa but­ter. Indeed, researchers at the University of Pisa pub­lished a study in 2017 demon­strat­ing that extra vir­gin olive oil-enriched dark choco­late improved the car­dio­vas­cu­lar risk pro­files of healthy par­tic­i­pants.

“The price of cocoa has caused an enor­mous strain on choco­late pro­duc­ers every­where,” Hallot Parson, K+M Chocolates’ gen­eral man­ager, told Olive Oil Times. ​“We are some­what lucky to have a decent inven­tory of cocoa beans, but cocoa but­ter has become par­tic­u­larly costly.”

“To give you some con­text, from 2019 to 2023, we typ­i­cally paid between $8 and $9 (€7.40 and €8.30) per kilo­gram for organic cocoa but­ter,” he added. ​“The cur­rent price is around $36 (€33) per kilo­gram. If we were to buy a 12.5 met­ric ton con­tainer, which is far more than we need or could afford, the price only drops to $26 (€23.8) per kilo­gram plus ship­ping from South America.”

Fortunately for K+M Chocolates, the company’s use of extra vir­gin olive oil instead of cocoa but­ter in var­i­ous prod­ucts has given them a com­pet­i­tive advan­tage despite the his­tor­i­cally high olive oil prices.

“So far, we haven’t had to raise our prices on retail choco­late bars,” Parson said. ​“This is largely because we use olive oil instead of much of the cocoa but­ter for many of the bars. However, we also focus on mak­ing pre­mium choco­late for pas­try chefs and restau­rant use. For these appli­ca­tions, good flu­id­ity of the choco­late is crit­i­cal, and that flu­id­ity comes largely from a higher con­tent of cocoa but­ter.”

While the com­pany has not raised its prices, Parson said food ser­vice prices were ris­ing, impact­ing large European choco­late pro­duc­ers who have his­tor­i­cally dom­i­nated the mar­ket.

“Ironically, we may now be in a posi­tion to offer extremely com­pet­i­tive pric­ing against these mass-pro­duced brands,” Parson said. ​“This has never been pos­si­ble for most craft choco­late com­pa­nies due to economies of scale and the added care we put into our sourc­ing and pro­duc­tion.”

Along with the ris­ing prices for raw mate­ri­als, Parson said the com­pany faces chal­lenges with its expan­sion into Asia due to the trans­port logis­tics and costs.

“We have exported to Korea sev­eral times, but ulti­mately, it has proven too costly to estab­lish a pres­ence there,” Parson said.

Despite higher prices, con­sumers still crave both choco­late and olive oil. According to Fortune Business Insights, a mar­ket research firm, the Asia Pacific olive oil mar­ket is pro­jected to grow to $18.4 bil­lion (€16.8 bil­lion) by 2030, a 30-per­cent increase from 2022.

Separate research esti­mates the global choco­late mar­ket will grow steadily to $197 bil­lion (€181 bil­lion) by 2032, 50 per­cent above its 2023 value.

• Fortune Business Insights
• Yahoo Finance