Chocolate lovers face price rise as ingredients soar

Nestle, whose chocolate products include Scorched Almonds and Kit Kat, is reviewing its pricing. Photo / Sarah Ivey

A rally in raw ingredient costs is cutting into the profits of New Zealand chocolate manufacturers, and firms say customers could face price rises of as much as 15 per cent this year.

One company is warning of a "shockwave" through the local industry as global commodity prices filter through.

A political crisis in Africa's Ivory Coast - the world's largest cocoa producer - pushed cocoa to a 11-month high of US$3250 ($4282) a tonne on Friday.

And the price was set to climb higher overnight after Ivory Coast's president-elect, Alassane Ouattara, ordered a halt in all coffee and cocoa exports until February 23 in an attempt to cut off vital revenues to his rival, incumbent president Laurent Gbagbo.

Maurice Gunnell, manager of corporate services at Nestle New Zealand, said the firm had faced a 400 per cent increase in its cocoa costs over the past two years. The situation in the Ivory Coast would be of concern, Gunnell said.

Nestle, whose chocolate products include Scorched Almonds and Kit Kat, is reviewing its pricing.

"The extent of the commodity price increases are so huge that we can't absorb all of it and therefore we will have to pass on some form of price increase over the next couple of months," Gunnell said, adding that the increase would be "single digit".

A 9 per cent increase would lift the price of a Kit Kat Chunky bar bought for $2.30 up to $2.50.

Cadbury corporate affairs manager Aimee Driscoll said the company was facing pressure from fluctuating commodity costs but was unable to say whether that pressure would result in price increases for its customers.

Paul Donovan, chief chocolate maker at Hamilton's Donovans Chocolates, said rising sugar and cocoa prices took some time to filter through to New Zealand confectionary makers and there would likely be a "shockwave" through the entire industry over the next few months.

The price of sugar on the London market hit a record this month.

Donovan said his firm sourced its cocoa from more politically stable Ghana, although he said developments in the neighbouring Ivory Coast had a big impact on the global price of the commodity. He said consumers would face price increases of up to 15 per cent for their chocolate this year.

Ivory Coast has an annual cocoa crop worth $2.1 billion, which accounts for one-third of the global supply.

Additional reporting: BLOOMBERG