Home Brussels Belgium’s renowned chocolatiers grapple with soaring cocoa prices

Belgium’s renowned chocolatiers grapple with soaring cocoa prices

by editor

BRUSSELS — You famously never know what you’re going to get when you open a box of chocolates. But for Belgium, a state that’s synonymous with the high-end confectionery, soaring cocoa prices are making life for the nation’s chocolate aficionados even more uncertain than usual.

This year, after extreme weather hammered west Africa’s cocoa harvest for the third consecutive year, prices soared in response. Cocoa futures trading in London and New York temporarily hit as high as €9,300 per ton, triple last year’s amount.

The gaping shortage of beans has percolated its way through to Europe’s premier confectionery hub, putting chocolate makers under unprecedented cost pressure and forcing up prices just as seasonal demand peaks going into the Easter holiday.

But while there’s no doubt chocolatiers are perturbed by the crisis, for now, a sense of stoicism prevails in the industry linked to the presumption that chocolate addicts are far less price sensitive than conventional consumers.

When probed by POLITICO most merchants noted the industry had already been forced to contend with a post-pandemic demand surge. This, alongside broad-based European inflation, had made it much easier to put up prices than expected.

Post-Covid “people have really returned to artisanal chocolate, maybe they buy a little less, but of higher quality, with more transparency,” Jérôme Grimonpon, a chocolatier in Brussels, told POLITICO. 

“So I think artisanal chocolate-making isn’t too worried … that said, I think industrial operators will have to be more careful.”

Even so, few countries are as economically exposed to the velvety treat as Belgium. Per capita, Belgium boasts the highest number of chocolatiers and shops worldwide, as well as the tenth largest consumer base. It also hosts the biggest chocolate factory on earth: Barry Callebaut’s Wieze plant in East Flanders.

The figures are mouth-watering. The sector’s annual revenue is over €6 billion, according to industry figures, more than the other core Belgian staples of beer, fries and mussels combined. “Big Chocolate,” meanwhile, directly employs some 9,000 people — nearly as many as the steel industry — accounting for roughly 1 percent of gross domestic product. External trade makes up half that value, putting Belgium among the top global exporters.

Chocolate infuses the national spirit too. Many even say it underpins cultural unity in a land otherwise divided by history and language. “Whatever happens, we automatically bring chocolate … there’s an event, we go and bring chocolate. We want to thank someone? We’re going to offer chocolate,” said Grimonpon.

That sentiment is echoed by everyday chocoholics on the streets of Brussels. 

“I don’t think I’ll ever stop eating chocolate [no matter the price],” said Luci Comincioli, inside the Lindt shop on Rue Du Luxembourg, at the heart of the capital’s European Quarter. “It’s not like cigarettes or alcohol or drugs or sex. It’s something else.”

Bitter taste

Market lore, nevertheless, dictates that even insatiable demand will run into limits eventually — especially if supply side factors cannot organically adjust to higher prices. The phenomenon is called demand destruction, and for Belgium it poses a threat to an economy that has arguably put a disproportional amount of chocolate eggs in one basket.

The sector’s annual revenue is over €6 billion, according to industry figures, more than the other core Belgian staples of beer, fries and mussels combined. | James Arthur Gekiere/Belga/AFP via Getty Images

The bad news is that supply side bottlenecks are unlikely to be unclogged any time soon.

Processors in Ivory Coast and Ghana are shutting down for lack of beans, while Barry Callebaut has begun laying off 500 workers at its Belgian facilities. Queen Mathilde jetted off in early March to the Ivory Coast, where she visited a cocoa plantation, warning journalists of an inconveniently expensive truth.

“The path from producer to consumer must become more sustainable,” she said.

Another problem for processors is that three-quarters of Belgium’s cocoa beans come from west Africa, with 55 percent grown in Ivory Coast alone. These countries’ farmers are facing financial hardship due to climate change, aging trees and the proliferation of diseases that threaten the fragile economics of cocoa.

“This is an equatorial crop, right? So the [growing] zone that’s available … is shrinking,” said Douglas Lamont, CEO of Tony’s Chocolonely, Europe’s most fairtrade chocolate brand. “Cocoa trees take five years to be productive. So this isn’t like wheat, where you can go, ‘oh, the price is high, everyone’s gonna plant next year and there’s going to be loads of wheat.’”

“It’s far more likely that [the shortage] will accentuate,” he told POLITICO.

Not helping matters is how underpaid farmers have been for decades. This, industry experts say, is a function of Ivory Coast and Ghana centrally managing their “farmgate” prices — currently fixed at 1,000 Central African francs (CFA) per kilogram, roughly €1.50. While the rates guarantee a price floor for farmers, which protect them in the event of unexpected gluts, they also cap their income when shortages manifest.

Three-quarters of Belgium’s cocoa beans come from west Africa. These countries’ farmers are facing financial hardship due to climate change, aging trees and the proliferation of diseases that threaten the fragile economics of cocoa. | Sia Kambou/AFP via Getty Images

Over the last decade, the two countries have tried to increase their market power by erecting an OPEC-style cocoa cartel and applying surcharges when conditions are tight. Chocolate brands, however, have so far managed to cut them down each time. Their best try at yanking millions of growers out of poverty came in 2019 when, under the auspices of a policy known as the Living Income Differential (LID), they set a $400 per ton toll on most exports.

But then came the Covid-19 pandemic, which knocked a few percent off global chocolate demand, presenting buyers with the opportunity to boycott Ghanian and Ivorian cocoa until they discounted prices again.

Whether the current crisis will finally force manufacturers to cough up, especially those who need farmers to stick to their plots to maintain Europe’s praline output, is yet to be determined. But hopes seem high a deal could finally be done.

“This is the moment we should make a commitment to living income,” said Chocolonely’s Lamont. 

No more virtue signaling

In a sustainability-conscious era campaigners say the big brands need to start practising what they preach. In 2018, echoing that spirit, Belgian Prime Minister Alexander De Croo — the then-minister of development cooperation — initiated a sustainable chocolate roundtable called “Beyond Chocolate,” with the explicit aim of ensuring a living income by 2030 for all farmers supplying Belgian chocolatiers.

Over 70 actors signed up, accounting for 90 percent of Belgian chocolate production and nearly 60 percent of Belgian consumption. And yet, according to Bart van Beisen, policy adviser at Oxfam, the commitment still hasn’t achieved very much.

“Currently there are implemented living income strategies for only 1 percent of Belgian chocolate,” he said, noting that while the country’s development agency does organize training for cooperatives, Belgian involvement is mostly limited to co-funding private sector pilots.

“There are no signs of leadership to shift to a sustainable supply chain with accountable participants,” he told POLITICO. 

The result is an industry in dramatic decline, with many west African farmers likely to quit cocoa entirely unless a higher price norm that can account for sustainable farming is established soon.

While such an adjustment might turn the once-affordable luxury into a much less frequent indulgence, it’s unlikely to crush even the premium market entirely.

Back in Brussels, Luci Comincioli says she’d still buy chocolate even if prices doubled. “It’s one of those small pleasures you can always afford … that has been around your whole life,” she said.

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