How Halloween Candy Gets To The Grocery Store | Big Business

Key Takeaways

[Music] this Factory is behind the biggest chocolate manufacturer in the world we make enough chocolate in 4 days to equal the weight of the Statue of Liberty here they pump out 45,000 tons of Snickers and peanut M&M's every year but this year the cocoa beans needed to make chocolate have gotten a lot more expensive the price of cocoa on the global market did Skyrocket historical highs a dire Bean shortage in 2024 pushed the price to an all-time high of over $112,000 in metric ton it never has happened before nobody was able to predict that we would ever get to this level consumers are already seeing candy bars hit shelves with a little less chocolate so what's causing the surge in Cocoa prices and what does this mean for chocolate lovers Joseph sasu starts harvesting his 17 Acres of cocoa in the central region of Ghana in October inside this healthy pod are the pearly white cocoa beans that will become chocolate but in the last few years Joseph has been finding more sick pods like this completely black or covered in white fuzz they've been infected with with an incurable virus called swollen [Music] shoot tiny Mee bugs spread the virus as they feed on the sap of the cocoa trees once it takes hold the leaves can become discolored or die back stems might swell and smaller pods may form after a few years swollen Sho can kill the plant [Music] Ghana and Ivory Coast grow more than half of the world's cocoa crop but for the third straight season there hasn't been enough cocoa to meet Global demand this year farmers are projected to harvest over 700,000 metric tons less than the previous season now nearly a third of Coco Farmland in Ghana is infected the only way to stop the spread is by cutting down the infected trees and planting new ones which can take 4 years to grow fruit imagine from a small holders perspective you're faced with a choice of removing eliminating your potential to earn an income or keeping that tree going for as long as you can that's Christy LEL a 20-year veteran chocolate scholar the longer you keep a tree around with swollen shoot virus the more chance it has to spread to surrounding trees Joseph has already removed about 1,500 infected trees within the last 5 years another problem is that Ghana's land is also r in gold and more and more illegal mining operations called gamy have been taking up land that used to grow cocoa trees these miners have been known to intimidate Farmers into selling their land sometimes they'll take over Farms without asking at all that's what happened to Janet armed guards kept her out while miners cut down nearly all of her 6,000 trees to dig gold they left her land Barren and poisoned over and over and over again I have had cocoa Farmers really on the verge of tears explaining to me that they are no longer able to sell cocoa even if they've retained their own land the lampy has been growing since the 2000s many illegal mines are operated by Chinese companies that have brought in equipment to speed up production and convert Farms faster and more Coco Farms are selling their land in part due to an economic crisis that sent inflation skyrocketing to 54% in 2022 we know that Coco farmers are very often constrained for cash this may look like an attractive option if you are really Stu to Joseph has refused to sell to gamy even though his trees have been struggling parts of GH are facing their worst drought in 40 years other parts of the country have dealt with heavy rainfall that spoiled beans last year Joseph made less than $1,800 from his farm and while cocoa prices are spiking globally because of the shortage Farmers aren't necessarily benefiting from that that's because they have to sell every single Bean they grow to the country's cocoa board known as the cocoa bod the organization was created in 1947 to protect Farmers from volatile Global prices at the beginning of each season cocoa bod sets the price it will pay Farmers for their beans when the price goes down globally Farmers still get the set amount from cocoa bot but if the price goes up they won't benefit from that Coco bot is the only organization allowed to Market and Export Ghana's beans its biggest clients are the world's largest chocolate companies mostly in Europe and North America Coco bod negotiates contracts with these companies to deliver beans months in the future that's called the Futures Market because of the shortages cocoa beans reached a record $112,000 per metric ton in April 2024 on the Futures Market more than five times what farmers were making then so some Farmers started turning to the black market selling their crops to Smugglers who could pay them more in an attempt to stop that cocoa bot in September increased what it pays Farmers to about $3,000 per metric ton Koko's future price has dropped since April but it's still about double what it was a year ago it's a Price Coco processors in Ghana are struggling to pay most of West Africa's beans don't stay on the continent they're exported to the US and Europe where large multinational corporations turn the beans into valuable chocolate bars if you look at the value chain of Coco money is made in the finished product Lloyd overseas Niche which roasts and grinds beans it's one of only about a dozen companies set up to process Coco in Ghana because it's so expensive to do it Lloyd's been pushing to keep more chocolate production inside his country we are not consuming our own raw material so we are pushing for the consumption of our chocolate in Africa this year that goal got harder Niche and most Canan factories had to stall production at some point in 2023 because they couldn't afford beans despite being much closer to Farms Gan processors have to pay the same price as foreign companies when buying beans from cocobod for now almost all of Lloyd's business is making semi-finish products like cocoa butter and cocoa Mass but he wants to make more finished chocolate bars I'm not going to pride myself in shipping chocolates to Europe no I want my chocolate to be consumed in Africa the Coco crop took hold in Ghana in the 1870s around the same time the British declared the southern region a colony and began invading North in the century that followed Coco production exploded locals owned and ran all the small farms but the raw product was almost exclusively exported to Europe a lot of what we know today as contemporary chocolate really grew out of this trading relationship between Ghana and Britain including the the flavor of chocolate itself although Ghana gained its independence in 1957 it still exports most of its beans abroad with half ending up in Europe This has left West Africa with just 5% of the $200 billion chocolate industry despite it growing about 34s of the world's Coco and the global surge in price this year has made it even harder for Ghana to change that this really is a setback um with the whole agenda last two years the outputs even from these artial chocolate makers have also had a nose dive Michael runs Farah freak a chocolate maker and Amasi Ghana while he had to dish out a lot more cash for beans he didn't have to shut down or pause production we had to make tough decisions as a company to to still St a flute when we filmed with him 2 years ago farre was focused on making finished chocolate bars pumped into molds in temperature controlled rooms but to stay afloat Michael has pivoted to making chocolate drops which he sells mostly in Europe to the baking and ice cream Industries we are doing up to 60% of the container space for CH drops as we stand right now we are completely sold out for chocolate drops for next year Michael is also focusing on countries like South Africa which has less competition from big chocolate [Music] makers so how is all of this affecting prices and production in the US one of New York City's oldest chocolate houses had to cut cost too well we use a high percentage of cocoa in our product right and so I think that's why we're probably getting hit harder Anthony Cerrone co-own the centuryold company lilac chocolates he buys these 10lb blocks from Cargill in Minnesota one of the world's largest chocolate processors we melt it down we temper it and we use it as an ingredient in our recipes we renewed our chocolate contract this year our prices were up 62% versus last year as you can imagine that was a big hit Anthony had to raise prices on a few items in March but most of his Suites haven't seen an increase we made the decision to you know accept lower margins through the season that means through Christmas some of our items we haven't taken a price increase for 2 years and despite the chocolate prices we decided not to luckily the company saw a 9% increase in sales this year which has helped and Anthony hopes he'll see another bump this fall and holiday season we're in Halloween season now but the day after Halloween Thanksgiving items are going to show up so we're making items like our turkeys this one's 13 12 lb that's 8 lb yeah 8 lb almost nine to make these huge sculptures workers paint on colorful details with dyed white chocolate so they'll do one color put it in the cooler bring it out do the second color and so and so forth they build them up from this fountain for the shell lilac has about a th000 specialty molds in its collection the Empire State Building a chocolate pizza slice these are very popular we have a car collection here we have whales we make these delicious chocolate high heels that come um painted and we also make these chocolate handbags but more than half of the company's store sales come from treats in the cases non perels truffles chocolate covered pretzels workers pipe unmold and package each one by hand everything that we do here is old school there's a lot of labor involved the Brooklyn factory makes 175,000 lbs of chocolate a year and has followed the same recipe since the 1920s almond bark is probably our number one bestselling product of everything that we make it's got two ingredients chocolate and almonds still Anthony isn't sure he'll be able to hold pricing on these handmade products if Coco gets more expensive if the prices continue to go up next year I mean that's going to affect our business and at some point we'll probably have to take price increases but we're trying to hold off as long as we can multinational chocolate companies are also pivoting the big companies have more options for managing that price increase use less cocoa in their products put other stuff into your products nuts marshmallows in 2020 mandelay dropped the size of many of its cadburry chocolate bar multi packs in 2019 Hershey's cut down its 18 Oz kisses pack by almost 2 oz Hershey's also launched a new chocolate frosted dut Kit Kat that's just dipped in chocolate not completely coated and ares's cup filled with caramel as well as peanut butter in 2023 Nesley shrunk its funsize kitap Bars by 17% in Australia Mars wly slimmed down its Galaxy chocolate bar in the UK by 10 G we visited Mars Wrigley's Chocolate Factory in Topeka Kansas which makes Snickers milky ways and peanut M&M's it's a pressure but it goes through Cycles like every other commodity Tim label Mars Wrigley's Chief Halloween officer yes that's his real title maintains that the company hasn't touched its recipes in the US before we pass on a price increase to a consumer we look at every possible angle to take costs out of the system in a responsible way the company said it can turn to cutting manufacturing and material costs when Coco prices go up Mars Wrigley says it has increased its suggested pricing for retailers like any company there's been pricing over the last couple of years done in a way where uh we believe it's a responsible way to do it when we visited the factory it was producing enough candy each day to stretch about 120 M this year we are going to make the most Halloween candy that we've ever made in Topeka Mars's Topeka Factory gets the majority of its cocoa from West Africa and makes 1 and2 million pounds of chocolate in house every week its milky ways are nougat and caramel and robed in chocolate our Three Musketeers Milky Way line it's actually our largest and longest fill bar line in the world for Mars Wrigley Mars Snickers are milk chocolate filled with caramel and peanuts and while regular M&M's are mostly milk chocolate the peanut ones are mostly well nuts every day we roast enough peanuts that equal to the weight of a fire truck the peanuts get coated in chocolate and then covered in a colorful candy shell made of sugar yeah a lot of people believe that the color of the M&M makes the flavor change but really it doesn't they're the exact same flavor in all the colors while workers aren't allowed to taste test straight off the line they can visual checks every hour they're making sure that the product is the right size the right shape the right decorations has M on them that the colors are right and if something looks wrong all of our Associates have the authority to shut the line down a meter make sure each bag is getting the right amount of each color my wife is never sick of me bringing home chocolate or coming home smelling like chocolate but Mars wriggley is seeing a trend that could bring some hope we have some of our fastest growing items in the fruity section in its annual report the company found that while chocolate was still its favorite gummies fruit and sour candies were more popular among younger Generations we're very fortunate where we have three platforms for our fruity business we have Lifesavers Starburst and Skittles sour is a big thing right now so we're looking to introduce sour based products in the in the gummy area Mars rley also found that younger customers like variety so the company launched these packs for Halloween which include both chocolate and gummies so I think we're well positioned to take on any headwinds or Tailwinds that come our way but what does all this mean for customers well besides maybe a little less cocoa in your chocolate bar you might also have to Shell out some extra cash Hershey's and Cadbury have also raised prices meaning your money might not go as far to fill up your Halloween bucket this year the best thing you can do is to prepare your expectations for some kind of change that may be fewer bars on shelves May mean that your best loved chocolate uh candy looks a little bit different I think we have been living with this chocolate as an everyday luxury for Generations now so I think that it is probably wise for for people to start thinking of chocolate as something a little bit more precious than we have done in the past [Music]