Orion and Haitai Confectionery Raise Prices from December 1
Heavy Rain and Drought Hit Kakao-Producing West Africa
Cocoa Prices Surge from $2,000 to $9,000
The chocolate lovers' sorrow knows no bounds due to global warming. The heavy rains and droughts that have struck West Africa have devastated cocoa farming, the main ingredient of chocolate, causing prices to skyrocket. As the burden of raw material costs increased, even Haitai Confectionery and Orion, which had said "there will be no price increase this year," have raised prices after Lotte Wellfood. Now, it has become difficult to find chocolate snacks in supermarkets that have not increased in price, from the popular daycare snack 'Choco Song-i' to 'Pepero,' which has entered New York's Times Square in the United States.
According to the food industry on the 28th, Orion will raise the prices of 13 products, including Choco Song-i, by an average of 10.6% starting next month. Most of these are chocolate snacks. This is the first price increase by Orion in about two years since September 2022.
The products with the highest rate of increase are Choco Song-i and Bicho B. Both will rise by 20%. Based on convenience store prices, Choco Song-i will increase from 1,000 won to 1,200 won, and Bicho B from 3,000 won to 3,600 won. Bicho B, a choco sandwich, has recently gained popularity among foreign tourists and has become a 'must-buy souvenir' for Korean travelers, with the largest increase of 600 won. Additionally, Market O Brownie will rise from 3,000 won to 3,300 won for the first time in 16 years, and Moist Choco Chip will increase from 2,400 won to 2,800 won for the first time in 12 years.
An Orion official explained, "Products with a high proportion of raw materials such as cocoa, whose prices have surged, and whose profit margins have sharply declined, are subject to price increases."
Accordingly, following Lotte Wellfood, Haitai Confectionery and Orion have implemented a 'domino price increase' on chocolate snacks. Earlier in May, Lotte Wellfood raised prices of 17 types of chocolate and confectionery products by an average of 12%. As a result, Ghana Mild rose from 1,200 won to 1,400 won, Binch from 2,800 won to 3,000 won, and Pepero from 1,700 won to 1,800 won. Haitai Confectionery will also raise prices of 10 types of chocolate products by an average of 8.59% starting next month. Home Run Ball will increase from 1,700 won to 1,900 won, and Jayeo Sigan from 1,000 won to 1,200 won.
Food companies point to the sharp rise in international prices of cocoa, the raw material for chocolate, as the reason behind the domino price increases. According to the New York Mercantile Exchange, the international raw material price of cocoa processed from cacao was in the $2,000 range per ton as of March last year, but surpassed $10,000 in April this year and is currently around $9,000.
The soaring cocoa prices are due to abnormal weather conditions that have hit West Africa, a major cacao producing region. Record-breaking heavy rains, droughts, and severe diseases in Ghana and C?te d'Ivoire have devastated cocoa farming. In other words, abnormal weather has caused climateflation (climate + inflation), raising food prices.
This is the background behind Orion's decision to raise chocolate snack prices, even overturning CEO Lee Seung-jun's statement that "there will be no price increase this year." An Orion official said, "How desperate must it have been to decide to suspend the supply of 'To You,' a symbolic product that has been on the market for over 30 years," adding, "The price increase was decided based on forecasts that cocoa prices will continue to rise for several years."
Meanwhile, in response to the prolonged rise in cocoa prices, global companies are releasing products with reduced cocoa content. Nestl? has launched a new product with one-third the chocolate content compared to before, and Hershey has halved the chocolate content in its chocolate-coated products. The U.S. Bloomberg News reported, "As cocoa prices soar, confectionery companies are actively engaging in shrinkflation by reducing the size or cocoa content of chocolate products."
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