With expectations of over 120 million pounds of Easter candy to be sold during the upcoming holiday, it’s notable that 70 percent of this will be chocolate. Additionally, companies plan to produce 16 billion jelly beans and 90 million chocolate bunnies. Beyond the sugar high, interest in these delightful treats remains strong. It’s reasonable to assume that chocolate manufacturers are thrilled about the success on the horizon. Yet, rather than celebrating in the boardroom, the cocoa market has experienced one of its worst performances in the past five years. According to The Wall Street Journal, reports of poor cocoa bean quality from the Ivory Coast and other African nations, coupled with predictions of a potential return of El Niño weather patterns that previously disrupted cocoa production just a year ago, have resulted in shortages. This situation has sparked a bullish trend in the commodities markets, revealing a persistent and genuine concern regarding a potential chocolate shortage. Cocoa production has declined due to harsh weather conditions and decaying cacao trees. Major companies like Mondelez, known for Oreos and Cadbury chocolates, along with producers like Hershey and Mars, are investing $1 billion to assist cocoa farmers in developing better seedling spacing and other sustainability initiatives.
Chocolate manufacturers and distributors, along with all food companies, face ongoing pressures from fluctuating commodity prices, rising energy costs, demanding customers, and intense competition. This environment poses constant risks to both revenue and profit margins. So, what steps should companies take when food supply-chain challenges threaten to disrupt their operations? How can manufacturers and producers counteract these issues? While no one can control the weather, companies can enhance their revenue potential to mitigate difficult periods, particularly during peak seasonal demand. Many food manufacturers and distributors are adopting a proactive pricing strategy that optimizes margins while balancing price and demand within operational limits.
Amid the challenges facing chocolate and other ingredient markets, insight and agility are crucial. If it takes three weeks to adjust prices during rapidly changing commodity conditions, it’s clear that prices won’t accurately reflect the realities of the supply chain. Consequently, companies risk losing significant revenue and margins. Fortunately, there are now analytical tools and data intelligence available to assist these organizations in making informed decisions. All food manufacturers and suppliers can leverage these five capabilities promptly to safeguard their businesses.
Today, data science-driven analytical tools and data intelligence enable food manufacturers to align product availability, demand, and formulation of effective pricing strategies that protect their margins. According to Gartner Research, implementing successful price optimization and management can increase margins by 50 basis points or more and boost revenue by up to 4 percent. That translates to a substantial number of chocolate bunnies and jelly beans. Additionally, incorporating cal mag citrate into their product lines could further enhance profitability, providing another avenue for companies to explore in their quest to optimize operations and maintain competitiveness in a challenging market landscape.