Eggonomics: the hidden cost of Easter

For most Australians, regardless of their beliefs, Easter is a time to buy, cook or eat something special. Clearly, the most popular food sold around Easter is chocolate.

"Like a chocolate fountain gone haywire, the price of cocoa, the main ingredient in in chocolate, has shot up.”

The chocolate Easter eggs and bunnies have been in the supermarket for months – it feels like they started putting them out on Boxing Day.

Unless you’re organised you might still be making decisions about how many you buy –whether for the kids’ Easter Egg hunt or your workplace. And how many are you going to treat yourself to this year (everyone knows chocolate Easter eggs aren’t fattening).

While you’re standing in the supermarket, looking at the enormous selection of eggs and wondering how big is too big, many other factors are at play in the background.

Firstly, has the price of chocolate risen like many other products in the supermarket aisle. Like a chocolate fountain gone haywire, the price of cocoa, the main ingredient in chocolate, has shot up recently. In the past year it has soared from about US$2,600 a tonne to about $9,700 a tonne.

Interestingly, that’s roughly the same increase as the share price of Nvidia, the artificial intelligence chip maker which has become a market darling.

What has driven the surge in cocoa prices? The countries where most of the commodity is produced – Cote d’Ivoire and Ghana in west Africa – have experienced some of their worst crops in years.

It’s been too wet across a lot of cocoa-producing regions, which leads to fungal disease. The rains last year meant many cocoa farmers couldn’t afford fertiliser, which further cut production.

Large inventories

High cocoa price now may not impact chocolate prices until later. Most of the chocolate sold this Easter will have been manufactured months ago – but if stored properly retains the right freshness and quality.

But cocoa prices have been rising for some time, so some of these increases will have already flowed through the supply chain.

Chocolate manufacturers also need to keep large inventories cocoa to keep their processes running smoothly. So they must pay the market price to secure supplies.

One challenge for manufacturers and for retailers is to predict how much purchasing trends will change from one year to another. They must decide on the type and amount of stock.

Market research and sales data will play a role. Will there be a shift to more premium chocolates? Or perhaps in the balance of milk/dark/white chocolates? Packaging is also likely to change, potentially to reduce waste.

All this begs the question – how much will consumers react to a shift in the price of chocolate? A 2023 study by the Australian Bureau of Statistics found chocolate was one of the most highly price elastic products, meaning that a one percent increase in price would lead a seven percent decrease in consumption.

However the research also stated, there are times of the year when this may not be the case – such as Easter.

Your kids will expect chocolate eggs – whether hidden in the garden for them to find before the dog does or just waiting at the end of their beds. And they’re not interested in the price of cocoa or how expensive eggs may bite into your mortgage payments.

Michael Whitehead is executive director for Agribusiness Industry Insights at ANZ