Bittersweet impact of COVID-19 on chocolate consumption

A report by agribusiness banking specialist Rabobank has found that global chocolate consumption has fallen significantly over recent months, as COVID-19 restrictions limited impulse purchasing and consumer confidence fell. According to the report, a significant proportion of chocolate demand is comprised of impulse and gift purchases made at retail shops, vending machines, airports or while travelling.

Andrew Rawlings, author and Rabobank commodities analyst, believes that the instant gratification of an in-person purchase has been largely unavailable due to COVID-19 restrictions. “This, combined with the prospect of a recession, has seen consumers more likely to shun indulgent snacks, especially those considered a luxury,” Rawlings said.

In the US, chocolate sales in supermarkets initially increased in April as consumers stockpiled goods; however, sales for May and June showed steep month-on-month declines.

“We’ve also seen this trend play out in other regions and other commodities across the globe, with a short period of stockpiling prior to government lockdowns followed by a return to a new normal in sales,” Rawlings said.

While the report did not include details about Australians’ chocolate consumption, Rabobank Australian-based senior analyst Michael Harvey said similar trends are expected to have been evidenced locally, due to weaker economic conditions making consumers disinclined to make discretionary purchases of some luxury food items.

“Australia’s economic slowdown over recent months is likely to have adversely impacted chocolate sales; however, the country’s relative success in controlling the spread of COVID-19 means sales may have declined less significantly than in some other regions,” Harvey said.

The report revealed that the decrease in global chocolate consumption has led to a fall in demand for cocoa grindings, the main ingredient in chocolate. Harvey believes that this decline in demand for cocoa, coupled with strong supply, could mean good news for chocolate lovers, as it could keep a lid on retail price rises in the near future.

According to the report, in some regions, such as Europe, processors increased cocoa grindings in quarter one, anticipating the potential for future plant closures during lockdowns. However, outright lower cocoa demand in the fallout of COVID-19 saw grindings in major production regions fall year-on-year in quarter two.

“For this period, European grindings fell by 8.9% year-on-year — the largest percentage decline in Europe since 2012 — while there were also big year-on-year falls in grindings production in North America (10.5%) and in Asia (6%),” Rawlings said.

The report predicts that the recession resulting from COVID-19 will extend into 2020/21, with cocoa demand unlikely to resume its growth trend until 2021/22, assuming a complete relaxation of social distancing measures. While COVID-19 has impacted the demand for cocoa, it has had a minimal impact on cocoa supply. Rawlings predicts that the imbalance between supply and demand will likely keep pressure on cocoa prices until availability weakens or a weather issue develops ahead of the main crop in October.

“The mid-crop harvest is well underway in West Africa and with no major weather issues, cocoa availability at origin should be extremely good,” Rawlings said.

Image credit: ©stock.adobe.com/au/Belokoni Dmitri