With the cost of cocoa at an all time high, this Easter has seen the emergence of a phenomenon dubbed 'eggflation', with the price of chocolate eggs also increasing – a situation that is impacting buying behaviour, GlobalData has said.
According to Ramsey Baghdadi, consumer analyst at GlobalData, said that while other raw materials have started to lower in price, cocoa and sugar have seen "particularly high cost increases due to unfavourable weather conditions. This adds an extra layer of challenges for chocolate manufacturers, as the decision to increase the price of their end products becomes more likely.
"If manufacturers decide to raise their chocolate prices, they will likely experience less sales this year, as consumers show money-saving behaviour in response to the cost-of-living crisis.”
Too Expensive
In the UK, for example, a recent survey carried out by GlobalData found that one in ten UK consumers said that have stopped buying chocolate, confectionery, and dessert products because they are too expensive. In addition, more than half (54%) of UK consumers said that they are switching to private-label alternatives when it came to chocolate or other sweet treats.
According to Baghdadi, an affordable pricing strategy is a "critical success factor" for chocolate and Easter egg brands this year, given this increase in private-label switching.
Cocoa Prices
"Looking forward, cocoa prices are expected to impact shopping behaviours during other festive seasons such as Halloween and Christmas," he added. "A well-executed promotion partnership with retailers will ultimately leverage the revenue performance, as this closely aligns with consumer preferences.
“In addition to pricing, positioning is also key for chocolate companies. Having multiple points of sale will ensure consumer engagement. A clear omnichannel strategy to target consumers online and offline will be a sink or swim moment for the chocolate industry.”
Read More: Hershey, Mondelēz Bet Big On Easter As Cocoa Price Crisis Looms
