* Cocoa price rise to force chocolate makers to raise prices
* Cocoa hits year high on Ivorian ban extension concerns
* Consumers seen willing to pay more for Swiss quality
By Silke Koltrowitz and Nathalie Olof-Ors
ZURICH, 14 Feb Chocolate lovers will have to dig
deeper into their pockets as record-high cocoa prices, boosted
by fears an Ivorian cocoa export ban may be extended, leave
Swiss chocolate makers no choice but to pass on the increase.
Ivory Coast's presidential claimant Alassane Ouattara said
in a news interview on Monday that he would extend indefinitely
a one-month ban on cocoa exports if his rival, incumbent Laurent
Gbagbo, did not leave power by the end of that period next week.
May ICE cocoa futures CCc2 jumped to $3,444 a tonne on the
news, their highest since January 2010. [ID:nLDE71D17I]
Most Swiss chocolate makers source their cocoa from other
West African countries, like Ghana, and are thus not directly
affected by the embargo, but expensive cocoa weighs on their
margins and will force them to pass on the cost to customers.
"Obviously, for chocolate companies higher prices are going
to hurt. However, chocolate tends to be sold in convenience
channels like kiosks or garages where increasing prices is less
difficult," Kepler Research analyst Jon Cox said.
The business model of the world's biggest maker of chocolate
products, Barry Callebaut (BARN.S), allows it to pass on the
lion's share of higher cocoa costs to its customers. Food giants
Kraft Foods KFT.N and Nestle NESN.VX are among its clients.
RISES & RECIPES
While heavyweights like Nestle, whose Swiss unit makes
Cailler chocolate, remain rather evasive on potential price
hikes for chocolate, smaller companies are more outspoken.
"Cocoa prices have risen more than those of other raw
materials like sugar, milk, nuts or almonds. We raised prices by
2 percent in 2010, which was not enough to offset higher input
costs," said Jean-Baptiste Maugars, managing director of
Geneva-based artisan chocolate manufacturer Favarger.
Chocolat Frey, owned by Swiss retailer Migros, also had to
put up prices on some products last autumn. "If cocoa prices
rise further, price increases will be inevitable, in Switzerland
as well as abroad," spokeswoman Marianne Jordi said.
Chocolate is one of Switzerland's best-known products, along
with cheese and watches. The 18 members of chocolate industry
body Chocosuisse increased sales by 2.4 percent to 1.74 billion
Swiss francs ($1.79 billion) in 2010. More than 60 percent of
their production was sold abroad.
Many chocolate makers have already increased prices, which
will make it difficult to negotiate another round with
retailers, Vontobel analyst Claudia Lenz said.
"When the price increased significantly we saw that some
companies changed the recipes in emerging markets, using less
cocoa butter and more cocoa compound, as this ingredient is
cheaper," she said.
For the premium segment most Swiss chocolate makers are
active in, however, this is not a viable option as quality is
their biggest selling point.
Sylvia Kaelin, spokeswoman of premium chocolate maker Lindt
& Spruengli, which is known for gold foil-wrapped Easter
bunnies, said reformulating recipes was out of the question.
"Our customers are aware that we stick to quality and this
is why they are normally willing to understand why prices have
to be increased," she said.
Lindt & Spruengli raised prices by about 1 percent this
month and further hikes could not be ruled if the cost of cocoa
beans went up significantly, Kaelin said.
(Editing by Jason Neely)