By Francesco Solfrini

This Easter, Australians and Kiwis will have to spend more to treat their families. The shortage of key ingredients is making finer foods such as chocolate and olive oil more expensive.

With Ghana and the Ivory Coast producing about 60% of the world’s crop, global supply of cocoa has been impacted by wet weather in West Africa. Olive oil and sugar prices have also reached record heights due to adverse conditions. Plus, the shift towards alternative farming practices, along with other global events, has affected the availability and price of eggs.

The ripple effect of shortages is reverberating across businesses of all sizes. Farmer livelihoods and small businesses are at risk. During the fourth quarter of 2023, chocolate producer Hershey’s profits decreased by 11.5% year-over-year. The world's largest chocolate company, Barry Callebaut, has announced that it will lay off 2500 employees: 18% of its workforce. 

The cocoa crisis

Cocoa production in West Africa has seen a significant decline due to a combination of environmental, economic and systemic factors.

Last season, El Niño led to higher temperatures, increased rainfall and the spread of diseases such as swollen shoot virus, which has resulted in the loss of harvests across nearly 500,000 hectares in Ghana.

Economically, the cycle of cocoa production faces issues as ageing cocoa trees become more disease prone and costly to maintain. Farmers struggle to find new areas for cultivation due to deforestation. This problem is compounded by the lack of fair compensation for sustainable cocoa farming.

Causing greater concerns are the industry’s systemic issues. Historically low prices have made growing cocoa commercially unviable compared with the more lucrative trading and processing of beans into chocolate.

Considered a poor man’s crop, cocoa has been predominantly grown by smallholders in West Africa, who have seen it as their only escape from poverty but lacked the resources to invest in their farms. As a result, the world has enjoyed low-priced chocolate for decades, but the cocoa industry hasn’t evolved into a commercial plantation business. This underinvestment is finally catching up with the growing demand. In 2023–2024, global consumption of chocolate will surpass production for the third consecutive crop season.

And the trend is here to stay. According to Statista, the chocolate confectionery market volume is expected to increase by 3% in 2025 and amount to 20.28 billion kilograms by 2028.

Click image to enlarge. Source: Statista, Chocolate Confectionery – Worldwide

How businesses are responding to shortages

To mitigate the impact, chocolate companies are adopting new pricing, shrinkflation and communication strategies.

Last year, Hershey and Mondelēz International, Cadbury’s parent company, decided to pass on the cost increase to consumers.

Other brands have reduced the size of their products, while maintaining label prices. Caught by one consumer on social media, Nestlé eventually admitted that its ‘fun size’ KitKats have indeed become 17% smaller and blamed price increases in cocoa, sugar, transport and shipping, wages and energy.

Consumer advocate magazine Choice has recently found another Easter favourite guilty of the shrinkflation sin. Compared with last year, Community Co’s chocolate hot cross buns have shrunk by 30g and have also gone up in price, from A$4 to A$4.50. 

From chocolate eggs to chickens’ eggs

The egg industry is facing similar challenges, with New Zealand having recently grappled with a 400,000 hen deficit.

Gareth van der Heyden, Better Eggs’ CEO, says, “The phased elimination of battery cages was announced in 2012, so we saw the egg shortage coming. The reality is, even leading up to the December 2022 deadline, farmers were not profitable enough to introduce new birds into the system.”

Better Eggs had been preparing for the shortage by increasing its volume steadily over the previous years, but still couldn't meet the full market demand.

That’s when the company enacted a long-term communication plan.

“We put limits on orders and communicated with our wholesale customers across several months, so they were well aware of the situation. We developed a different plan for each customer, clarifying quantities and when they would receive them. Our sales team was brought in on the journey, to manage the situation in the field,” says van der Heyden.

Once the situation normalised, the company known for its forest-range eggs started to benefit from the increased production capacity and market share.

“For us, the shortages have been an opportunity to grow the business into the future and build some very strong relationships with our customers,” adds van der Heyden. 

Will innovation save the day?

To be prepared for black swan events and shortages, Better Eggs relies on contingency plans and future shopper research to anticipate consumer trends and preferences.

With climate experts forecasting that by 2050 nearly one-third of the world’s cocoa production could vanish due to increasing temperatures, chocolate manufacturers are exploring cocoa alternatives.

The German company Planet A Foods is using technology to transform ingredients such as oats and sunflower seeds into substitutes for cocoa mass and butter. The €14.2 million (US$15.4 million) in Series A funding it recently raised proves that innovation could be the solution to cocoa and other shortages alike.