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June 05, 2006

The coming chocolate shortage

Horror of horrors, the world's supply of cocao beans is running out -- consumed by voracious Asian populations who have already managed to devour the world's energy and precious metals markets. At least that is what the Times would have you believe in a recent scare article on chocolate and the Asian consumer. According to the Times article, increasing demand from Asia threatens to bring the global cocao industry to its knees:

With chocolate consumption increasing at a rate of 25 per cent a year in the Asia-Pacific region, and 30 per cent in China, chocolate makers fear that coco- bean growers will not be able to keep up with demand.

The article initally focuses on Japan, but it soon become apparent that the real threat is not coming from Japanese housewives snapping up chocolate bars in glitzy Ginza department stores. Ever since the first Dutch sailor gave a chocolate bar to his mistress somewhere in the red-light district of Nagasaki, chocolate has been a staple of the Japanese diat. However, it has taken over 200 years for average annual Japanese consumption to reach a meager 2.2kg per person -- around one-fifth of average annual Swiss consumption. The real growth is coming from across the Sea of Japan, where one billion sweet-toothed Chinese are starting to discover the joys of chocolate:

Annual consumption in China is smaller still at 50g a year, but its population of 1.3 billion, and its rapidly expanding urban middle class, make it the market of the future...But even just 1 per cent of China is 13 million people, which is about the size of Tokyo. That’s why chocolate producers are concerned.

Indeed. Let us shed a few crocodile tears for the producers who will be forced to raise prices at the first sign of cacao shortages, thereby passing the higher costs of cocao beans on to the consumer. Its truly hard to imagine why the prospect of millions of new customers is striking fear into the hearts of producers. If anyone should be concerned about the rise of China and possible squeeze on the cacao bean trade, it should be today's chocolate consumer, who may someday see a substantial rise in the price of chocolate end products. Wasn't that a lesson made clear by the recent rise in gas prices?

Last updated on June 5, 2006 08:31 PM