Chocolate Money? Chocolate as a Commodity
How chocolate is a sought-after stock market commodity.
Chocolate, in addition to being a passion for your sweet tooth, is a big player in the world economy. Cocoa is traded as a commodity, and many chocolatiers are publicly held companies whose stocks are traded on exchanges around the world.
Cocoa -- along with coffee, sugar, orange juice and other consumer products -- is traded on the floors of the New York Board of Trade and the London International Financial Futures Exchange. These exchanges bring buyers and sellers of a commodity together and set prices that are ultimately passed on to consumers. A whopping 3 million tons of cocoa, worth $5.1 billion, are produced around the world each year.
Chocolate is also traded on the stock market, with Nestle, Ferrero, Cadbury, Mars and Hershey among the top 10 global chocolate manufacturers. According to Business Week, sales of chocolate in the U.S. reached $15.6 billion in 2006, proving its worth as a deliciously serious commodity.
Passionate About Dark Chocolate
While the success and popularity of chocolate can fluctuate from year to year, manufacturers that change with the times and improve on their products will likely succeed at producing this delicacy for centuries. The most recent chocolate trend that has all of Wall Street talking is the popularity of dark chocolate, and particularly dark chocolate products made by upscale, gourmet chocolatiers.
Not only are people eating more chocolate, they're eating a greater percentage of the dark stuff, which contains more cocoa. That's good news for the industry in general. According to the August issue of "Business Week," sales and profits are up in the high-end chocolate industry as consumers continue to whet their appetites for a moment of edible perfection, or a whole box.
In the United States, sales of chocolate have climbed about 3% each year since 2000, the National Confectioners Association has reported, with dark chocolate one of the fastest-growing categories. Consumers are apparently doing the same thing with chocolate as with the rest of the food market -- trading up and being more particular about what they buy.
Over the years, chocolate has become a luxury commodity with big names like Godiva reporting $500 million in annual sales, and Lindt & Sprüngli of Zurich, Switzerland, which also owns Ghirardelli, enjoying record sales growth of 15.7 percent in the first six months of 2007.
Not to be left behind, mainstream chocolate makers have jumped onto the bandwagon, introducing their own organic and premium chocolate brands, adding dark chocolate to their mix of products (even Mars bars!), and acquiring a number of luxury chocolate manufacturers.
I'll have my chocolate antenna on in early 2008, when a new chocolate line is expected to appear on the shelves at my neighborhood Starbucks (and yours). Hershey's recently signed an agreement with the coffee giant to produce and market Starbucks chocolate. Now that's a partnership that promises to produce one sweet little commodity.