Cocoa's sharp dip at the start of 2016 puts shortage fears to rest


“Don’t panic, but we’re running out of chocolate” shouted the headlines in 2014. Production shortfalls, surging cacao prices and the changing appetites of the middle class Chinese were going to make our favorite confection scarcer and pricier. By the year 2020, the “chocapocalypse” would arrive, forcing manufacturers to make do with dismal substitutes like carob. 

And yet, in the first two weeks of 2016, prices have already taken a sharp dip--nearly 15%. In the intervening years since the shortage scare, chocolate products for sale on our shelves have proliferated in variety and improved in quality. Applewood-smoked bacon, and DNA-tested single origin bars abound. So why the "chocapocalypse" fallacy, and what does it mean?

“That’s a good question, I can’t figure it out myself,” says International Cocoa Organization (ICCO) spokesperson, Michael Segal, referring to the periodic doomsayer stories, which he says focus on outdated predictions of shortfalls that never bore out. “If you were cynical you’d say it was in the interests of chocolate sellers for these stories to come out right before holiday season, when everybody buys chocolate.”

The ICCO agrees the growth in demand for chocolate over the last decade has been remarkable: demand for grindings, the processed bean used to make cocoa butter and powder, has grown by one fifth. Changing tastes in North America and the European Union towards darker, higher quality chocolate, [and] China’s expanding middle class, in particular has contributed to that growth, although its 435 thousand tonne share still amounts to no more than 8% of global cacao consumption.

But as demand has surged, so has output. The world’s largest producers, Ivory Coast and Ghana, have posted record production, too. Despite bad weather, 2015 saw a modest 36,000 tonne surplus, as have half of the last ten years. Africa has nearly doubled its production capacity in the last decade. 

The most severe cocoa shortage in recent memory, in 1977, saw cacao prices at a whopping historical high of $18,000/tonne, adjusted for inflation, as compared to today’s $2,900/tonne. Even then, not a single Valentine sweetheart nor child on Easter was left wanting for chocolate. The shortage simply meant that global stores in reserve dwindled to a historical low of 20% of global consumption. Today’s stores are equivalent to at least 39% of the total market, and could accommodate five more Chinas. 

Estimates show cocoa prices are set to drop so sharply as to be the worst performing soft commodity of the year in 2016. The "chocapocalypse," it seems, has once again been postponed.