Price Increases due to world wide cacao shortage.
Sudden price increase, please do read all of this, and let us know what your thoughts are.
Just before Easter while preparing a new ingredients order, we realised that the poor cacao harvests in the last 12 months and big company greed have finally caught up with us.
As we have told many of you, 2/3rds of the worlds cacao comes from West Africa. It’s generally low quality and heavily farmed, and bought in huge quantities very cheaply by the 5 big chocolate corporations.
However, the last year or so has seen crops devastated by several things, including disease, heavy out of season rain, and bad crop care. This in turn has created such a shortage that it has been forcing the price up. Initially quite slowly, but the more the big boys buy up to fulfil their needs, costs skyrocketed. This has culminated in the last 6 weeks with ingredient costs going up more than 100%, yes you read that right. 100% in 6 weeks. Double. See the attached chart.
Our last cacao butter order cost £465, Easter the same amount was £1008.
Our last bean order 6 weeks ago was £750, Easter it was £1590.
Considering that these two ingredients make up on average 70% of our handmade bars, because we don’t pad them out with junk, we have been put in a very difficult position and have to make some decisions that we do not want to make.
Our choices are:
- Stay as we are price wise, and go out of business probably inside 3 months. This is a business that pays our bills. We have to make money to live.
- Keep the same pricing model and dramatically increase prices to suit, so we make the same percentage profit but charge probably double what we do now. Business suicide for us as there are limits to what people will pay, however good the product.
- Increase our prices proportionately, increasing by the ingredient cost only. We will both still make the same monetary profit per bar, but have to charge quite a bit more. Sales will drop due to people not wanting to pay so much for a bar. We go out of business in probably 6 months, but it buys us time to rethink our business model and try to find a viable solution.
- Shut our doors now with immediate effect. We waste all the time and effort that’s been put in the last couple of years and deprive you of your favourite bars.
There are other options we have studied but none really work as it’s the core costs that are the issue.
Option 1 seems pointless, we would be working hard for next to no return and would need more than double the current sales to make the same money.
Option 2 may be logical, but sales would be minimal.
Option 4 is the most logical as it cuts short the stress and pain of giving up something that you love. It does add other issues though.
Option 3 we feel is the best of the bad options available. But we estimate around 25-30% price increase across all of our ranges just to stay where we are now.
This we know will stop some of you buying our bars as they’ll be too expensive, but what choice do we have? Our supply chain is already being hit with the big boys trying to clean out our suppliers buy offering high prices. Luckily for now, they are holding fast to try and protect us smaller companies. This is going to affect ALL chocolate companies until the harvests improve, the first possibility for this is October, and thats looking doubtful. Cacao take a long time to mature.
What WILL be a shock to people generally is when these price hikes hit the big boys, and even the palm oil and additive laden commercial bar prices suddenly go up, probably not in the too distant future.
We have now placed our order despite the huge cost, and will be setting the price increase from Wednesday 10th April. However, we will also honour any order requests within reason up to that time at the current rate, even though delivery will be after that date.
Thank you for taking the time to read all of this, I probably could have shortened it but all the information contained is relevant to how we move forward, as are your replies.
Best Regards
Paul & Roni Cheesemam
Gatos Chocolate