If you think about the holidays, any holiday there are some wide spread traditions to them and people continue to do them because they seem to go with the holiday. For example, one of the many traditions with Easter is eating chocolate. Whatever the next holiday is you may or may not eat chocolate but Easter has lots of chocolate attached to it. This year when going into the shops to buy chocolate, it seemed the prices had increased.

In an article by Francis Kokutse and Jessica Donati of the Associated Press, there was a good reason for the increase. About 3/4’s of the world’s cocoa, the main ingredient in chocolate comes from Ghana, Ivory Coast, Nigeria and Cameroon, all countries in Africa. The cocoa grows on cocoa trees. This year the sand from the seasonal winds off the Sahara desert blocked sunlight needed for the bean pods to grow. Last year there was too much rain which spread a rotting disease.

In a world of supply and demand, when supply is decreased and demand grows, prices rise. On the New York Futures Exchange, prices have risen from $5,000 to $10,000 per metric ton.

Farmers say the increases are good, but they are not enough to cover their expenses because the yields are lower and higher production costs.

For the companies with the names on the back of the box, Hershey Foods increased their net profit margins to 16.7% up from 15.8% in 2022. Mondelez International which owns Cadbury and Toblerone brands, net profit margins increased to 13.8% up from 8.6%.

Mondelez raised prices 15% last year, Hershey increased prices and may raise prices again according to Michele Buck, Chairman, President and CEO of Hersheys.

The National Retail Federation expected Easter spending on chocolate bunnies and eggs to be $3.1 billion down from $3.3 billion a year ago.

Switzerland is home to the world’s biggest consumers of chocolate on a per capita basis, eating about 10.9 kilos per person. The company behind the golden bunny Lindt & Sprungli, increased profit margins to 15.6% up from 15% a year earlier.

The business model once again proved to be successful in financial year 2023, the company noted. Price increases accounted for most of the growth in profit margins.

Linking to dividend paying stocks, in a commodity linked firm, owning the company that has the highest margins is better than buying companies that produce the raw material or commodity. In investments there are many choices, finding companies that can raise prices and maintain margins is worthy of your homework.

There are more questions than answers, till the next time – to raising questions.