Shoppers miss out on a big choc drop

The biggest names in chocolate are still hoiking prices and shrinking the size of their bars - despite the falling cost of raw materials.

The cost of the ingredients in a bar of milk chocolate fell 21% to £970.8/t in 2011, driven down by a slump in cocoa prices, according to Mintec.

Heavy rains in the Ivory Coast and Ghana boosted crops, leading to a 47% reduction in the price of cocoa butter, which account for more than half the ingredient costs in a typical chocolate bar.

However, lower ingredients costs have not brought about lower retail prices. Indeed, shoppers have endured another round of price hikes over the past year.

The average price of a standard 46g of Galaxy across the big four and Waitrose has increased from 55p to 58p after rising by the same amount in 2010. And Cadbury added a penny to Dairy Milk, taking it to 58p after a 3p increase in 2010.

Bigger bars and multipacks shot up even more in price as the average price per kilo of all Mars, Cadbury and Nestlé chocolate SKUs at the supermarkets rose 8% to £11.74 [52 w/e 16 February BrandView].

As well as hiking product prices, suppliers have been shrinking the size of many lines. In September, The Grocer revealed Cadbury had cut the weight of a tin of Roses from 975g to 850g while keeping the price the same.

Chocolate manufacturers and retailers denied failing to pass on lower ingredient costs to consumers. They said it took time for commodity changes to influence retail prices as ingredients like cocoa were usually bought on futures markets at least six months before delivery.

“Companies will have forward contracted their cocoa as long as a year ahead - so the price they bought at is unlikely to be the same as the cocoa price when the chocolate goes on shelves,” said one supplier.

Mintec analyst Robert Miles added that chocolate on shelves was made a long time in advance, further delaying the on-shelf impact of commodity price changes.

Kraft, Mars and Nestlé declined to comment.