World Cocoa Foundation

Global Cocoa Market

Overview of the Global Market

The global demand for cocoa and cocoa butter is driven by the global chocolate confectionary market. Despite the global economic downturn having had a negative impact on the chocolate confectionary market in the year ended 30 September 2009 (grindings fell 4.4 percent to 3.5 million tonnes) annual demand for cacao surpassed its 2008 peak in 2011 and stood at approximately 4.0 million tonnes in 2013, and is expected to reach 4.2 million tonnes for the year ended 30 September 2014 (as estimated by the International Cocoa Organization). The Directors believe that whilst the demand-side factors in respect of cocoa are encouraging in the current economic climate, particularly in Asia, it is the supply-side pressures on the production capacity of existing producers which creates a very promising commercial environment for the Group.


Global demand, as represented by grindings tracked by the ICCO, has grown from 1.0 million tonnes to an estimated 4.3 million tonnes during the period 1961 to 2014, a CAGR of 2.7 per cent. Consumption of chocolate confectionary is strongly linked to per capita incomes, with a more elastic response demonstrated in lower income countries. With per capita incomes now demonstrating growth across the world’s advanced economies and per capita incomes in emerging markets continuing to rise, particularly in Asia, Africa and Eastern Europe, the Directors believe that the fundamentals for cocoa demand are very encouraging.

Major Cacao Producers (000s of Tonnes) [to be changed]


Cacao is grown exclusively in a very narrow geographic band near the equator due to climatic and rainfall requirements of the crop. This band spans West Africa, parts of Central & South America and Southeast Asia. In the opinion of the Directors, this represents a significant barrier to entry and fundamental constraint on supply. The main cacao producing countries are detailed here:

Major Cacao Producers (000s of Tonnes)

According to the ICCO’s forecasts for the year ended 2014, the three largest producing countries account for, in aggregate, approximately 70.7 per cent. of global cacao production, and consist of the Ivory Coast (39.8 per cent.), Ghana (21.1 per cent.) and Indonesia (9.8 per cent.). Indonesia however is now a net importer of beans from West Africa due to the rapidly growing in-country demand for chocolate. A further 20 per cent. is produced by the next four largest producers, Brazil, Nigeria, Cameroon and Ecuador with production market shares estimated at 4.8, 5.5, 4.6 and 4.6 per cent., respectively. Brazil however is now also a net importer of beans from West Africa due to their growing in-country demand for chocolate. The other relatively insignificant contributors, at this current point in time, to the global market are Peru, Colombia, Mexico, Dominican Republic and Papua New Guinea.

In total, the ICCO expects Africa to produce approximately 73 per cent. of the world’s cacao for the year ended 2014, yet this represents an estimated 85 per cent. of the world exported cacao when the total market size is adjusted for the net importers (Brazil and Indonesia). However, production in Africa has failed to keep pace with global demand due to, inter alia, the following factors:

  • The Governments of Ghana (recently downgraded to B2 by Moody’s) and Ivory Coast (rated B by Moody’s) maintaining monopolistic and price predatory market practices over their citizen farmers. The Ghana Cocoa Board paid a fixed price of 3,392 cedi per tonne for 2013-2014 season purchases, which based on current exchange rates represents approximately US$1,058 a tonne, and therefore equates to a 70 per cent. discount to the world market price at close of the 2014 season. The Ivory Coast purchasing board paid in the recent growing season CFA 750,000 per tonne, which represents approximately US$1,457 per tonne, and therefore equates to a 55 per cent. discount to the world market price at close of the 2014 season. In 2013, the Ivory Coast sentenced to jail senior executives of its cocoa purchasing board for corruption and ordered restitution exceeding one hundred million US dollars. The difference between the market price which the cocoa boards enjoy and the payouts to farmers exceeded US$3 billion for Ivory Coast and US$2 billion for Ghana for the year ended 2014.
  • An ageing crop and workforce (for example, the average age of cacao farmers in the Ivory Coast is approximately 50 years old in a nation where the average life expectancy is only 54 years).
  • Labour force and land use shift out of cacao and into rubber, palm oil or gold mining as landowners seek to generate maximum returns on their land parcels.
  • In Ghana specifically, growers’ earnings are being further eroded by inflation due to the pegging of farm prices by the domestic government on parity with those of the Ivory Coast.

The factors cited above explain why, despite an average price of over US$2,820 per tonne for cacao over the last five years, supply of cacao has not kept pace with demand. In partial response to this, Indonesia recently announced that it is considering cutting the import duty on cacao as domestic supply is unable to meet demand by the local processing industry. Within Latin America, only Peru and Ecuador have sufficiently low labour costs to support commercial (as opposed to small owner managed) cacao plantations. The Group is therefore seeking to take advantage of the predicted global shortfall in cacao production and is adopting a strategy to help the Group become the largest independent producer in the world.