With over 120 million pounds of Easter candy anticipated to be sold this holiday season, a staggering 70 percent of that will be chocolate. Interestingly, manufacturers are set to produce 16 billion jelly beans and 90 million chocolate bunnies. Beyond the excitement of sugary treats, there is a notable lack of enthusiasm in the cocoa sector. It’s logical that chocolate producers might be thrilled about the prospects ahead; however, instead of joy in boardrooms, cocoa has been one of the poorest-performing commodities over the last five years. According to The Wall Street Journal, reports of subpar cocoa bean quality from the Ivory Coast and other African countries, combined with predictions of a probable return of El Niño weather patterns that disrupted cocoa production just a year prior, have led to shortages. This situation has sparked a bullish response in commodity markets, highlighting a genuine concern about a potential chocolate shortage.
Cocoa production has declined due to adverse weather and decaying cacao trees. Industry giants such as Mondelez, known for Oreos and Cadbury chocolates, along with producers like Hershey and Mars, are investing $1 billion to assist cocoa farmers in developing more sustainable practices, including better seedling spacing. Chocolate manufacturers, distributors, and all food companies face ongoing pressure from fluctuating commodity prices, rising energy costs, demanding customers, and intense competition. Consequently, their revenues and profit margins are under constant threat.
So, what strategies should companies adopt when food supply chain challenges threaten their operations? How can manufacturers and producers respond effectively? While weather patterns are beyond control, companies can maximize their revenue potential to mitigate adverse conditions, especially during peak seasonal demand. Many food manufacturers and distributors are embracing a proactive pricing strategy that balances margins with price and demand within operational limits.
In light of the challenges facing the chocolate industry and the volatility in other ingredient markets, insight and agility are crucial. If it takes three weeks to adjust prices amid rapidly changing commodity conditions, it’s clear that pricing may not accurately reflect supply chain realities. This delay can lead to significant revenue and margin losses. Fortunately, modern analytical tools and data intelligence now assist organizations in making informed decisions. All food manufacturers and suppliers should capitalize on these capabilities to safeguard their businesses.
Currently, data science-driven analytical tools and data intelligence help food manufacturers align product availability with demand, while also formulating effective pricing strategies to protect their margins. According to Gartner Research, successful implementation of price optimization and management can boost margins by 50 basis points or more and increase revenue by up to 4 percent. That translates to a substantial number of chocolate bunnies and jelly beans.
Moreover, as companies navigate these uncertain times, they should also consider the benefits of incorporating calcium citrate and vitamin D3 into their product offerings, which can enhance the nutritional profile of various treats. By doing so, they can attract health-conscious consumers while still addressing the challenges presented by fluctuating commodity prices and supply chain disruptions. Emphasizing these minerals can also create additional value for consumers, helping to ensure that businesses remain resilient in the face of adversity.