Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: I'm joined in the studio today by chocolate covered pretzels.
Speaker 2: They're my favorite chocolate snack, and I've brought them with
Speaker 2: me today because right now the world is in the
Speaker 2: grips of a coco crisis. The global supply of coco
Speaker 2: has plummeted and prices are at an all time high.
Speaker 1: I mean, we're going to get in trouble. We see
Speaker 1: it coming.
Speaker 2: Jacques Torres is a chocolateear based in New York. You
Speaker 2: might recognize him as a judge on the cheeky baking
Speaker 2: competition show Nailed It, where they nod to his bubbly
Speaker 2: and very French approach.
Speaker 3: The judge that knows the fudge Monsieur Jaquestrres.
Speaker 2: He's the owner of Jacques Torres Chocolate, one of the
Speaker 2: pioneers of artisanal bean to bar chocolate. The company is
Speaker 2: still known best for one of the very first treats
Speaker 2: Torres served, hot chocolate. He got the flash of inspiration
Speaker 2: for the signature product when he tried a cup of
Speaker 2: American style hot chocolate. It was nothing like what he
Speaker 2: grew up with in France.
Speaker 1: I'm from the south of France, and when you want
Speaker 1: to hot chocolate, it's there. They make hot chocolate starting
Speaker 1: from chocolate chocolate. Do they really they make the real thing?
Speaker 2: Torres thought, I will introduce America to real hot chocolate
Speaker 2: made with actual chocolate, no cocoa powder. People will love it.
Speaker 1: Nobody wanted, adult was telling me. So I start to
Speaker 1: give it away every weekend. I do. I don't know
Speaker 1: how many, how many containers of hot chocolates, and I
Speaker 1: give it away until people start to say, you know what,
Speaker 1: it's actually good.
Speaker 2: The hot chocolate caught on, and twenty five years after
Speaker 2: the company's creation, Torres is still selling that super thick
Speaker 2: hot chocolate, along with everything from bon bonds to chocolate
Speaker 2: bunnies to bars.
Speaker 1: About one hundred tons for this year. My guess, I
Speaker 1: don't know bars is that WA's over ten thousand.
Speaker 2: That's a lot chocolate chocolate that's getting more expensive to
Speaker 2: make by the day. And in order to survive, Torres
Speaker 2: is faced with some tough choices like should he raise
Speaker 2: his prices?
Speaker 1: But it's a risk because people might not buy it,
Speaker 1: you know what I mean? I don't know what solution
Speaker 1: we have.
Speaker 2: Torres is in this situation because of events unfolding thousands
Speaker 2: of miles away in the cocoa farms of West Africa,
Speaker 2: where dyeing crops and drinking harvests have turned cocoa into
Speaker 2: an increasingly hot commodity. Bloomberg correspondent Mumby Gatou has been
Speaker 2: following the story.
Speaker 3: Now speaking to a chocolate to make a wild buck,
Speaker 3: and he said, maybe instead of buying cold people should
Speaker 3: be buying coco.
Speaker 2: Today on the show, We've Got a Chocolate problem. Extreme
Speaker 2: weather and a deadly fungus have killed millions of cocoa plants,
Speaker 2: and now everyone from farmers to chocolate makers are scrambling
Speaker 2: to survive. In many ways, the very future of chocolate
Speaker 2: is at state.
Speaker 1: We have to pay the farmer, We have to give
Speaker 1: them support. Otherwise the next generation of chef will not
Speaker 1: have chocolates.
Speaker 2: We track the cocoa crisis from the farms of Ghana
Speaker 2: to the chocolate factories of New York on a journey
Speaker 2: from bean to bar to pretzel. This is the big
Speaker 2: take from Bloomberg News. I'm Sarah Holder. My bag of
Speaker 2: chocolate covered pretzels costs four ninety, but pretty soon it
Speaker 2: could cost even more. Right now, cocoa is trading at
Speaker 2: an all time high more than ten thousand dollars a ton,
Speaker 2: that's about five dollars a pound this time last year,
Speaker 2: it costs just over a dollar a pound. This is
Speaker 2: all happening because of what's going on in West Africa,
Speaker 2: where most of the cocoa in the world is grown.
Speaker 3: Precisely, we get seventy five percent of a cocoa supply
Speaker 3: from Justusta.
Speaker 2: Mumbiguitao has been covering the cocoa story for Bloomberg and the.
Speaker 3: Top producers in that region are Ivory Coast in Ghana,
Speaker 3: and their production has fallen quite a lot in the
Speaker 3: current season.
Speaker 2: Just how low is that supply?
Speaker 3: For what we have on record from Ivory Coast, production
Speaker 3: is expected to fall by twenty five percent. Twenty five
Speaker 3: percent is a huge number.
Speaker 2: And as supply has fallen, prices have soared. Cocoa prices
Speaker 2: have more than doubled in just the last few months, like.
Speaker 3: A rocket launch. That has just been a vatical rise
Speaker 3: in the prices.
Speaker 2: Cocoa is a hard plant to cultivate. It's fussy and
Speaker 2: only grows in a handful of places in the world.
Speaker 2: The plants take years to produce, cocoa pods, and when
Speaker 2: they do reach maturity, they're prone to disease. But over
Speaker 2: the last few years, growing cocoa has gotten even harder
Speaker 2: as extreme weather events have hammered West Africa.
Speaker 3: Not a very good combination for coco moving from an
Speaker 3: extreme of heavy rains to a next stream of dryness.
Speaker 3: We've also had diseases like swollen shoe that infects are plant.
Speaker 2: You mentioned that disease that's been killing off a lot
Speaker 2: of cocoa plants, swollen shoot. Can you say more about
Speaker 2: what that disease does and why it's so destructive.
Speaker 3: If you've seen a coco tree, it produces pods that
Speaker 3: are the size of a rugby ball, and it's shaped
Speaker 3: in an oval shape. So when a tree is infected,
Speaker 3: those pods start to fall, the tree starts to turn
Speaker 3: black and gray and it doesn't produce anymore. And the
Speaker 3: problem with swollen shoe is that once one tree is infected,
Speaker 3: it starts to infect the rest of the trees in
Speaker 3: that plantation. So it starts to spread in just not
Speaker 3: one farmer's plantation, but the next farmer could have the
Speaker 3: same issue, and the next farmer will have the same issue,
Speaker 3: and the only way to eradicate it is by appruiting trees.
Speaker 2: Up rooting trees. That also means planting new ones, new ones,
Speaker 2: which could take up to five years to start bearing parts.
Speaker 2: In the meantime, the harvest out of countries like the
Speaker 2: Ivory Coast and Ghana have gotten smaller and smaller.
Speaker 4: Ghana have I started dropping and we are headed for
Speaker 4: a twenty year low.
Speaker 2: Eco Danto covers Coco for Bloomberg out of Acra, Ghana.
Speaker 2: He says, the coco farmers he's spoken with are really struggling.
Speaker 4: I say, Charlie, I've lost hope. Look at the trees.
Speaker 4: I've invested everything. I've spent my money, getting liberals and
Speaker 4: put a whole thing in place. But here you are
Speaker 4: the range one of four that you watch everything wither
Speaker 4: or away, and you are helpless.
Speaker 2: You might think the soaring price of cocoa would be
Speaker 2: benefiting farmers, even if they're producing less, their cocoa is
Speaker 2: worth a lot more, But that isn't happening. In Ghana
Speaker 2: and the Ivory Coast. The government dictates the price of coco.
Speaker 2: Farmers get a fixed amount for their beans, so even
Speaker 2: as cocoa price is sore, the farmers aren't the ones
Speaker 2: making that extra money.
Speaker 3: Farmers have been earning the same amount they've been earning
Speaker 3: for such a long time, and you can imagine the
Speaker 3: cost of living crisis that we've seen, the inflation that
Speaker 3: we've seen in the last cacolovias. Yet farmers have been
Speaker 3: earning the same That means they've not been able to
Speaker 3: invest back into the firms. They've not been able to
Speaker 3: afford fertilizes, chemicals, everything that is needed to make sure
Speaker 3: that a tree continues producing as much as it can produce.
Speaker 3: So some have resulted in abandoning their farms. Some have
Speaker 3: gone into other crops that they think are more profitable.
Speaker 2: Others have sold off their land to speculators who are
Speaker 2: hunting for gold deposits beneath the cocoa trees. Ghana reporter
Speaker 2: Ecodonto spoke with Francis Giabeg about his situation. Giabang is
Speaker 2: a farmer. He sixty four, has eight children. He owns
Speaker 2: a cocoa farm in southwestern Ghana. He spoke with Echo
Speaker 2: by phone. He's telling Echo that the crop disease was
Speaker 2: intense and this year's drought was long. With the scorching
Speaker 2: sun He says he's no benefit from high cocoa crisis
Speaker 2: and his cocoa pods are withered and dead. Echo has
Speaker 2: spoken with many farmers and says when it comes to cocoa,
Speaker 2: things might get worse before they get better.
Speaker 4: Future of cocoa is bleak in this country. I expect
Speaker 4: that in the next five years will be operating just
Speaker 4: about maybe half a million tons for some time until
Speaker 4: all those disease farms are rehabilitated.
Speaker 2: When we come back, how the cocoa shortage is flowing
Speaker 2: from the farms of Ghana up the supply chain to
Speaker 2: chocolate makers. Really real?
Speaker 1: Oh no, no, this is real. I mean we're going
Speaker 1: to get in trouble.
Speaker 2: That's after the break. We're back. We've been talking about
Speaker 2: the global cocoa crisis and its origin in the cocoa
Speaker 2: farms of Western Africa. Now these issues are flowing up
Speaker 2: the go supply chain to places like this.
Speaker 1: So you come with me, You go through the door.
Speaker 1: You guys can go to the shoe clearer.
Speaker 4: Okay, I assure you do that.
Speaker 2: Oh it smells amazing. This is Jacques Torres's chocolate factory
Speaker 2: in Brooklyn, New York. It is vast Torres zips around
Speaker 2: on a scooter from the Bonbond decorating room to the
Speaker 2: chocolate sculpting room to the chocolate cookie room and connecting
Speaker 2: them all a network of white pipes running along the ceiling.
Speaker 1: We have a forty thousand squaffee chocolate manufacture that are
Speaker 1: going to show you around.
Speaker 2: And what are we hearing right now?
Speaker 1: So there is a lot of different pumps going on
Speaker 1: and pushing the chocolates. The problem with the chocolates in
Speaker 1: those pipes. And you see the pipes on the ceiling,
Speaker 1: and all those pipes have chocolate running through.
Speaker 2: Them, pipes full of chocolate. I know what you're thinking,
Speaker 2: Where's the chocolate river?
Speaker 4: What is the chocolate river?
Speaker 2: That would be the chocolate river from the classic film
Speaker 2: Willy Wonka and the Chocolate Factory.
Speaker 1: What do you Monca is completely fake. I am the
Speaker 1: rear feed.
Speaker 2: But working in chocolate isn't as sweet as it used
Speaker 2: to be. Cocoa prices are on Torres's mind all the time.
Speaker 1: I'm tired of it. I don't want the business side anymore.
Speaker 1: I want to do what I love to do, to
Speaker 1: make chocolate, to eat chocolate, to drink our chocolate I'm
Speaker 1: not about the money. I'm more of a craftman.
Speaker 2: But with cocoa costs more than double what they were
Speaker 2: just a few months ago, there's no ignoring the money part.
Speaker 2: How often are you checking the price every day? First
Speaker 2: thing when you wake up?
Speaker 1: Yes, on my computer and I check prices.
Speaker 2: Torres doesn't even get most of his cocoa from West Africa,
Speaker 2: but the cocoa shortage there has created global supply chain
Speaker 2: issues and spike the price of cocoa everywhere. That means
Speaker 2: cocoa prices are seeping into Torres's world of pure imagination
Speaker 2: in a big way. He might have to pay four
Speaker 2: time is what he paid for cocoa last year, but
Speaker 2: he can't quadruple the price of his chocolates. Customers are
Speaker 2: sensitive even to small price sikes instant.
Speaker 1: We lose costumer right either way. And it's interesting sometimes
Speaker 1: I'm thinking, you know what we're going to rate to
Speaker 1: put another twenty five cents there, and nobody going to
Speaker 1: see the difference. People know the price of things, so
Speaker 1: it's dangerous to go with it to be too high
Speaker 1: in price or too fast, because then you lose customer.
Speaker 2: All of this makes the Wonka business pretty tough producers
Speaker 2: like Torres tend to have a reserve of cocoa, so
Speaker 2: higher prices don't affect them immediately, But Torres says by
Speaker 2: the end of the year the math is going to
Speaker 2: get really hard. About a quarter of the cost of
Speaker 2: Torres's chocolate bars come from cocoa, and if he can't
Speaker 2: pass those rising costs onto the consumers, he has to
Speaker 2: start taking a look at the product itself. Would you
Speaker 2: ever change your chocolate recipe?
Speaker 1: No, The only way to change your recp is to
Speaker 1: put less quality kakel beans or most sugar, so more
Speaker 1: sugar will not I can't. I mean, it's it's not
Speaker 1: who we are, it's not how we develop the company.
Speaker 1: It's not how do we develop how do we develop
Speaker 1: our name? So no, I will not change that. It's
Speaker 1: that's too important. Cannot touch that.
Speaker 2: Some of the big chocolate makers are already changing their recipes,
Speaker 2: putting a little less chocolate in their chocolate or making
Speaker 2: their products smaller shrinkflation. But that won't work for a
Speaker 2: smaller scale producer like Torres. He says, his customers would notice,
Speaker 2: But also the molds themselves are expensive, and buying all
Speaker 2: new ones would be a major cost for him. That
Speaker 2: leaves one last option filling the chocolates with more extra stuff.
Speaker 1: If you do a chocolate bar with almonds, then one
Speaker 1: third of the chocolate is going to be removed to
Speaker 1: fill the almonds. So one of the solutions that we
Speaker 1: are looking at is, okay, what is less expensive than
Speaker 1: cakeo a ten thousand dollars ton. So if almonds became
Speaker 1: less expensive than cacao, we're going to put a little
Speaker 1: bit more almonds, a little bit less chocolates, so people
Speaker 1: or customer, we get the same chocolate bar, the same weight,
Speaker 1: no shrinkage. So that's maybe a solution for us.
Speaker 2: Torres and his team are experimenting with adding more nuts
Speaker 2: and fruits to their chocolate bars. They're also thinking up
Speaker 2: new products. Price spikes and shortages are nothing new for
Speaker 2: chocolate tears. Torres says, during World War Two, Italian chocolate
Speaker 2: makers couldn't get their hands on much coco, so they
Speaker 2: started to adapt.
Speaker 1: So what the Italian? What the Italian?
Speaker 2: Did?
Speaker 1: They come up with this recipe? This is a jam
Speaker 1: douya juma.
Speaker 2: Coco might have been hard to come by for the Italians,
Speaker 2: but there were lots and lots of hazelnut trees.
Speaker 1: So what do they do. They used the hazel nuts
Speaker 1: that they have in Pimo and they mix it with
Speaker 1: chocolates and they make a bombon with it.
Speaker 2: The hazelnut chocolates became hugely, as did another product created
Speaker 2: out of that moment, Nutella.
Speaker 1: So those products was born.
Speaker 2: So we may get a new nutella because.
Speaker 4: Maybe we will.
Speaker 1: We will look at it.
Speaker 2: And he's hoping to bring some of that old school
Speaker 2: innovation to this moment to help him adapt to soaring
Speaker 2: cocoa prices. Right now, nothing is off the table, not
Speaker 2: even his beloved hot chocolate, the product that started it all.
Speaker 2: He bruised me a cup. It's made of crushed up chocolate.
Speaker 2: It's been his signature product for twenty five years. We
Speaker 2: use real chocolate, it says on the tin, never cocoa powder.
Speaker 2: But that famous cocoa might have to change. Already a
Speaker 2: fourteen ounce container costs about twenty five dollars. Charging more
Speaker 2: could be tricky, so instead Torres might have to rethink
Speaker 2: the mix.
Speaker 1: If I have to, I will replace twenty percent of
Speaker 1: the powder, maybe with a mixture of caca went sugar
Speaker 1: to not lose the flavor, but helping us with the price.
Speaker 1: I don't know what I'm going to do or do
Speaker 1: I just tell Costumer just more expensive. But it's a
Speaker 1: risk because people might not buy it, you know. I mean,
Speaker 1: I don't know what solution we have.
Speaker 2: Does it make you sad that you might have to
Speaker 2: change the ratios? No?
Speaker 1: Look again, in life, you do what you have to do.
Speaker 1: So I don't going to put something on the market
Speaker 1: that's not good. If I don't like it, I don't
Speaker 1: make it. I am very stubborn about it.
Speaker 2: In the meantime, Torres is doing everything he can to
Speaker 2: try and avoid making some of the more painful changes.
Speaker 2: He's been making deals with cocoa farmers to try and
Speaker 2: lock down future supply.
Speaker 1: We're also waiting. I don't want to change everything because
Speaker 1: it may be on the way down.
Speaker 2: Torres is still holding out hope that somehow prices will
Speaker 2: go down and he'll be able to keep his signature
Speaker 2: drink just as it is pure melted chocolate, very hot.
Speaker 1: Okay, so be careful. That would sick.
Speaker 2: This is the big take from Bloomberg News. I'm Sarah Holder.
Speaker 2: This episode was produced by Julia Press, Jessica Beck, and
Speaker 2: Alex Sugiura. It was edited by Stacy Vanicksmith and Jeff Sutherland.
Speaker 2: It was mixed by Ben O'Brien. It was fact checked
Speaker 2: by Adrianna Tapia. Our senior producer is Naomi Shaven. Our
Speaker 2: senior editor is Elizabeth Ponso. The Cold Beemster bor is
Speaker 2: Our executive producer. Sage Bauman is our head of podcasts.
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