Cocoa Panic? World's Largest Chocolatier Plans 19% Workforce Cut As Prices Hit Record Highs

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by Tyler Durden
Friday, Mar 01, 2024 - 09:15 AM

The world's largest maker of bulk chocolate is planning to cut about 19% of its workforce, totaling 2,500 jobs, as part of a cost-reduction strategy in response to a worsening cocoa shortage in West Africa, which has driven prices to record highs. 

"It's about reducing complexity and eliminating duplication and inefficient structures," Swiss chocolate maker Barry Callebaut CEO Peter Feld said in an interview with German newspaper Handelsblatt on Monday. 

Feld continued: "It's about reducing complexity and eliminating duplication and inefficient structures." 

Handelsblatt said the job cuts will be implemented across Barry Callebaut's operations worldwide over the coming 18 months. 

The move signifies Barry Callebaut is likely preparing for future demand woes as cocoa output in top grower Ivory Coast collapses, sending prices in London to record highs. 

According to trader Ecom Agroindustrial Corp., Ivory Coast's cocoa output is expected to plunge by as much as 20% this growing season. 

In a report viewed by Bloomberg, Ecom Agroindustrial forecasts 1.75 million tons of cocoa from the region in the season that ends in September. Based on International Cocoa Organization data, that would be the lowest total in eight years. 

Cocoa's price surge has been absolutely stunning to spectate over the last 15 months. Futures have soared to record highs, overtaking the highs last seen in 1977. Citigroup has warned prices could hit as high as $10,000 a ton. 

And the chocolate maker US Hershey Company warned in recent weeks: "Historic cocoa prices are expected to limit earnings growth this year."

It's only a matter of time before consumers are battered by candy inflation. Who will Biden's PR team blame for soaring candy prices?