Chocolate Industry not Immune from Market Forces

(MoneyWatch)  The chocolate business is not immune from the pressures affecting the rest of the food sector: input costs, way up; demand, way down.

Food Business News reports that the industry is dealing with "uncertain supply prospects, high prices and weaker demand."

Candy makers are passing costs along to consumers, or trying to. In some cases (again mirroring others in the packaged-food business), selling smaller bars for the same price.

Hershey raised its wholesale prices by 10 percent in August.

There may be some relief ahead, as futures traders told Food Business News that prices look posed to flatten out in coming months. That won't do much for the demand side, however, unless the consumer economy picks up. Meanwhile, other input costs, such as sugar, are also on the rise.

From 1997 to 2006, consumption of finished chocolate in developed countries rose slowly but steadily by 14 percent, or about 2 percent a year. The last time demand actually fell was during the recession of 2001-2002.