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From The Ivory Coast To Your Candy Store

News that Laurent Gbagbo, the former president of the Ivory Coast, has been arrested will come as a relief to many who feared that this small, sub-Saharan West African nation was heading deeper into civil war. Also relieved, though for an admittedly more selfish reason: Chocoholics.

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Now, with a new government taking over in the Ivory Coast, the world’s largest cocoa producer should finally be able to release nearly 700,000 tons of cocoa onto the market: 440,000 tons that have been trapped there since January and an estimated 220,000 tons expected from the mid-crop season later this month.

Cynical as it may sound, it’s one reason this story makes news.

The Ivory Coast is the world’s largest supplier of cocoa, accounting for more than one-third of the world’s supply. But while the long-awaited release of hundreds of thousands of tons of cocoa onto the world market would help restore the livelihoods of farmers and lead to cheaper prices for cocoa in the long-term … it’s unlikely to result in cheaper chocolate prices.

The backdrop to this story is as fascinating as it is surreal: cocoa beans have been used as bargaining chips in the battle for power there. On November 28th, Alassane Ouattara was elected president of the Ivory Coast, a country that remains deeply divided, but Gbagbo refused to relinquish power. In January, Ouattara asked companies to stop exporting cocoa to starve Gbagbo of the valuable cocoa export taxes he used to fund his regime.

That said, U.S. consumers are unlikely to feel the benefit of the surge in the supply of cocoa. Jack Russo, analyst at investment group Edward Jones, says that candy companies hike prices because of higher raw material costs, but also because they can. “Confectionary is one area where manufacturers can get away with raising prices,” he says. “Candy is a very brand-loyal category.”

Last month, Hershey announced an increase in wholesale prices of nearly 10% across many of its U.S. candy brands, citing input costs, including raw materials, packaging, fuel, utilities and transportation. Hershey spokesman Kirk Saville says the company doesn’t comment on individual commodities, but last month’s price hike announcement noted: “Consumers know and trust Hershey’s great brands.”

Mars Inc. re-directed calls to Kate Shaw, spokeswoman for the National Confectioners Association. Shaw says: “We can’t speculate on prices, but for the sake of tens of thousands of Ivorian farm families who rely on cocoa for their livelihoods the National Confectioners Association’s Chocolate Council hopes there will soon be a return to stability, including a resumption of cocoa trade.”

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  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.

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