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Anyone cracking open an Easter egg this year may notice two things: not only is it a lot more expensive, it’s also smaller.
Last year, a Maltesers truffles luxury Easter egg could be snapped up in Waitrose for £8. Now it costs £13, according to UK consumer group Which?. A Terry’s chocolate orange Easter egg with mini eggs has shrunk by 30g and a large Mars milk chocolate egg has dropped from 252g to 201g.
It’s not just Easter eggs that are getting smaller and more expensive. So-called shrinkflation is hitting economies and consumers across the world and drawing the ire of politicians on both sides of the Atlantic.
US President Joe Biden criticised companies over “price gouging” and downsizing of their products in his State of the Union address, saying that “snack companies think you won’t notice when they charge you just as much for the same size bag — but with fewer chips in it”.
He then took aim at Snickers, saying there were now bars with “10 per cent fewer Snickers in it”. Mars, the makers of Snickers, has denied the claim.
US Senator Bob Casey has proposed a Shrinkflation Prevention Act, which has won Biden’s backing, that would seek to limit the practice amid public perception that companies are using high inflation to raise their profit margins.
In France, finance minister Bruno Le Maire has called shrinkflation a “scam” that harms consumers. The country has requested EU approval for a proposed law that would require supermarkets to label products where volumes had been reduced by a certain amount.
“Shoppers are expecting pricing decisions in an ethical way,” said Jon Hauptman, founder of retail grocery specialist Price Dimensions. “When they see a product for which the size has been reduced and the price is the same, it gives the appearance of something being underhand. People think, ‘Oh gosh, somebody’s trying to take advantage of me’.”
A shrinkflation report published in December by Casey’s office pointed to Bureau of Labor Statistics figures showing snacks, candy and chewing gum, and ice cream were among the food categories most affected by the phenomenon. Other products, such as cleaning materials, were also hit.
But the historic rally in cocoa prices means that chocolate makers are particularly likely to turn to shrinkflation as a way of passing on costs. New York cocoa futures surged above a landmark $10,000 per tonne this week, more than doubling from the start of the year and tripling from May 2023.
Poor weather and disease in the world’s main cocoa growing region in West Africa has compounded deep structural problems in the industry, from ageing trees and chronic under-investment to climate change. This has slashed crop yields and plunged global supplies of cocoa beans into a third year of shortfall.
BNP Paribas analyst Max Gumport said that a new EU law that aimed to ban the sale of cocoa beans grown in areas of deforestation was also adding “structural costs” into the system.
Chocolate makers have for the most part managed to pass on the costs to consumers through relentless price hikes. Investors have soured on some confectioners, including US chocolate maker Hershey, which has struggled to offset its soaring costs.
But some premium chocolatiers have benefited from the soaring commodity costs. Swiss chocolatier Lindt reported sales growth of 10 per cent for the full year, its third year of double-digit growth.
“Higher commodity prices are good for companies with very strong pricing power,” said Bruno Monteyne, an analyst at Bernstein. He said that a recent global price hike of just 5 per cent by Lindt would be sufficient to maintain its margins this year.
Some chocolate makers are trying to substitute ingredients to cut costs. For solid bars of chocolate, especially ones with a designated cocoa percentage, that is tricky. But for other products, such as chocolate-coated biscuits, companies may replace the cocoa fat with a compound that includes a vegetable oil, which is “a fraction of the cost,” according to Andrew Moriarty at Mintec, a commodities data group.
“I know for a fact from some traders that I speak to that queries from their clients for compound rather than chocolate are just exploding right now,” he said. Other substitutions include using cheap powdered milk instead of the pricier anhydrous milk fat.
Consumers can also expect to see more white and aerated chocolate on supermarket shelves this year. Cadbury’s relaunch of the Wispa happened to follow a shortage of cocoa beans in 2007 and 2008 that left inventories low. “The amount of cocoa in a Wispa is less than in a Dairy Milk because of all the air bubbles,” explains one industry insider.
These tactics do not go unnoticed by consumers. Rising prices eventually depress sales, said Moriarty. “[Chocolate companies] can only pass on so much before consumers say ‘nope, I’ll just buy something else’ . . . That’s going to be an issue for [chocolate makers],” he said.
Gilles Rouvière from the Syndicat du Chocolat, a French industry body that represents 70 brands including chocolatiers Nestlé, Ferrero and Lindt, said makers are doing their best to protect consumers from rising costs. While cocoa prices rose more than 130 per cent between January 2023 and February 2024, the cost of chocolate products in French supermarkets went up just 11 per cent in 2023, he said.
The full impact of the current sky-high cocoa prices has yet to trickle down to chocolatiers, however. “Realistically, Easter will be more expensive this year,” said Moriarty, “but [the price of] chocolate for the rest of the year, it’s going to be horrific.”
Additional reporting by Leila Abboud in Paris
