Belgian chocolate under pressure amid inflation, economic downturn: industry insiders

Chocolates, a household favorite in Belgium, have become a source of stress for both consumers and producers as inflation and soaring costs take their toll.

The prices of chocolates are driven to rocketing high by rising inflation and increasing downside risks, two major economic challenges faced by many Eurozone countries. The recent sharp depreciation of the euro against the U.S. dollar has also added to inflationary pressures, further eroding purchasing power. With limited budgets, consumers are cutting back on non-essentials like chocolate.

“I’m really fond of Belgian chocolates. Unexpectedly, the prices are going always high and it affects all of us. I always check for discounts,” said a customer. “Of course, let’s say, last year I bought one kilo, now I’m buying half a kilo, maybe even 250 grams,” he said.

The impact is equally severe for chocolate makers, who find themselves squeezed by higher costs and falling demand. Philippe de Selliers, CEO of a Belgian chocolatier, described the strain on the industry by saying: “Every business is depending on the economy. So when the economy is going bad, we’ll be more difficult to keep the business. It’s true that the volume of the chocolate business is flat the last year, or maybe minus one percent. So that’s true that the industry, the chocolate industry this year was not increasing the volume.”

A big disadvantage for chocolate production is the skyrocketing price of cocoa, the key ingredient in chocolate. Futures prices for cocoa have surpassed 8,500 pounds (about 10,730 U.S. dollars) per ton, nearly triple the average price from two years ago.

“The price of cocoa has increased dramatically in the last two years from an average of 3,000 pounds (about 3,787 U.S. dollars) per ton. There were some bad conditions, weather conditions. The stock of cocoa was not as high as it has to be. The second reason is the fact that there were lots of speculations on the price of cocoa. So we have increased with probably between five and ten percent,” said Philippe de Selliers.

According to Eurostat, chocolate prices in the European Union rose by an average of 11.1 percent over the past year. Producers are adjusting their strategies under pressure. Some are reducing the cocoa content in their products, while others pursue high volume turnover with a lower margin.

Meanwhile, inflation in the Eurozone is coming back. Eurostat’s preliminary data show the inflation rate in November comes in at 2.3 percent, up from 2 percent in October. Although still far below the peaks of two years ago, the trend signals growing challenges for both businesses and consumers.