* Butter ratios at highest since 2008 in Asia, Europe, U.S.
* Global confectionary sales set to rise nearly 2 pct in
* Chocolatiers scramble to stock up on butter
By Lewa Pardomuan and Marcy Nicholson
SINGAPORE/NEW YORK, Sept 13 Chocoholics may have
to dig deeper to pay for their favorite treat this festive
season as sweet makers face sky-high prices for cocoa butter,
the special ingredient that gives chocolate its
Increased demand from Asia's expanding middle class and a
turnaround in sales in big consuming countries have seen butter
prices nearly double to more than $7,000 a tonne from $4,000 a
tonne six months ago.
With supplies tightening and demand showing no sign of
slowing ahead of the Christmas and New Year period, some
chocolate makers may have little choice but to pass on the
increased costs to consumers.
In the secretive industry, which has only a handful of big
players, chocolatiers tightly guard the recipes that distinguish
their products, and are equally cautious on prices.
Major sweet makers contacted by Reuters declined to comment
on whether the butter price hike would lead them to raise the
retail price for their chocolate bars, although Nestle
said any increase in price is always the last resort.
But some smaller chocolate makers have already pushed up
"We have increased our chocolate prices by 30 to 40 percent
since January and most of our customers are not happy about it,"
said Richard Lee, chief executive officer of Aalst Chocolate, a
Singapore-based chocolatier that sells chocolate to bakeries,
ice cream makers and food manufacturers
"With the festive season just around the corner, the price
of (cocoa butter) will rise even further and surely hit the
bottom line of chocolate makers," he said.
Chocolate lovers are set to munch through about 7.4 million
tonnes of the confectionary in 2013, up nearly 2 percent on a
year earlier and worth about $110 billion, according to global
market researcher Euromonitor International.
That's up from about 6.9 million tonnes in 2009, when
consumption dipped due to the global financial crisis, with
demand being driven by growing affluence in emerging nations.
"In the regions like Asia-Pacific or Latin America, we are
seeing more middle class consumers buying chocolates compared
with five or six years ago because they have the money to do
it," said Francisco Redruello, senior food analyst at
"That is what's driven the growth of chocolates."
At the same time, sales normally surge in Europe and North
America around Christmas, Valentine's Day and Easter, putting
pressure on confectionary companies to stock up.
"Trying to find uncommitted, accessible large volumes of
butter that's available from now through December, it's
problematic," said Jeff Rasinski, corporate director of
procurement for Blommer Chocolate Co, the biggest grinder in
Companies that have not already booked butter for the next
few months will be the most vulnerable to price increases, said
Cocoa beans are ground to produce roughly equal parts of
cocoa butter and cocoa powder, which is also used in chocolate
bars, as well as for lower quality uses in biscuits, ice cream
Strong demand for butter for premium products and an
over-expansion by grinders created left-over mountains of
powder, forcing grinders to cut capacity last year and leading
to a sharp drop in butter supply.
The so-called "butter ratio", which is used to determine
prices for the product has soared to five-year highs. The butter
ratio is set by the grinder, depending on supply and demand, and
multiplied by the London or New York cocoa futures price to
determine the price of cocoa butter.
The ratio is currently at about 2.9 in the United States,
compared with about 1.0 a year-and-a-half ago, while cocoa bean
prices have also jumped.
Ratios and futures usually move in opposite directions,
evening out butter prices swings, but butter has refused to fall
even as London and New York bean futures rallied to a 1-year
high this month on concerns over output in top producer Ivory
Coast and worries about a global bean deficit.
At present prices, butter accounts for about $7 of the cost
of a kilogram of chocolate.
The strong demand may give grinders more bargaining power,
selling butter only to buyers who also are willing to take
powder as well.
But for now the focus is on limited butter supplies.
Barry Callebaut, the world's biggest industrial
chocolate maker which sells to Unilever, Nestle
, Mondelez and Hershey Co, indicated
that price adjustments were sometimes inevitable.
"Most prices our customers pay for our products do move as
do the raw material market prices," said spokesman Raphael
Wermuth in an email, without elaborating.
In Asia, prices for some chocolate products have already
risen, and industry experts say more are expected.
A Singapore-based French chocolatier, who also sells gourmet
chocolate bars, chocolate cookies and lollipops online said:
"The management wants to increase the price but we haven't done
it yet. Butter prices have become so high"