How Chocolate Buyers Differ

Chocolate prices have been rising. First Côte d’Ivoire’s weather was too wet and then it became too dry. Next, yields sunk further because of black pod and swollen shoot disease, and older trees past their prime. Then, European environmental regulations could have further nudged prices upward.

But not all price hikes are the same. How we respond depends on where we live.

Chocolate Buyers

Global Buyers

It all begins with our chocolate consumption. If you live in Iceland (5.34 kg), France (4.68 kg), or the Ivory Coast (9.14 kg), annually, you probably eat more chocolate than the rest of us:

European Buyers

So yes, the French eat more chocolate. Explaining, the Wall Street Journal tells us that Europeans consider chocolate a staple that they nibble daily. Consequently, tossing bars into their grocery carts, they buy more:

American Buyers

By contrast, WSJ also says that chocolate is an impulse item in the United States. Not planning to buy it, we see a chocolate bar, make the purchase, and soon gobble it down.

Our Bottom Line: Elasticity

Higher cocoa futures eventually elevate what we pay for the chocolate we buy:

However, because of consumer elasticity, retailers are impacted differently.

Defined generally, elastic demand means that prices matter more. When they go up we have a distinct drop in the quantity we are willing and able to buy. Correspondingly, price decreases generate many more sales. For that reason, retailers are wise to reduce the price of items that are elastic like trendy t-shirts while avoiding increases. By contrast, for inelastic goods like milk or medical necessities, price fluctuations matter less.

With chocolate as a staple, our demand could be as inelastic as milk. By contrast, when it’s an impulse purchase, chocolate demand could be more elastic. Consequently, the bottom line of chocolate makers in Europe could suffer less from price hikes.

My sources and more: Last year, we looked at chocolate prices. Now WSJ  gave us the consumer response and Coco Terra a disease update.

Please note that several of today’s sentences were in a past econlife post.