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Chocolate prices have tripled. What does that mean for your Easter egg basket?

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6 months ago

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Easter season is underway at Toronto’s The Chocolateria, where the walls are lined with bunny-shaped chocolate treats, chocolate eggs wrapped in colourful foil, and delicate “smash” eggs paired with a mini chocolate hammer.

If only the main ingredient weren’t so expensive: Cocoa prices have tripled in the last 12 months due to the spread of bean disease among cacao crops in West Africa, where more than 70 per cent of the global cocoa supply is produced.

The resulting cocoa crisis is pressuring chocolate makers who, during the typically busy Easter holiday, are trying to sustain business — and sweet-toothed customers who are trying to curb spending.

“We’ve seen a regular increase in prices for our raw materials, which makes it harder for us to keep our prices down,” said Priscilla Tallo, manager at The Chocolateria.

“There’s some people who have made it clear that they can’t afford it anymore,” she added. “Most of our customers have been understanding. They see that everything is going up. So they understand why our prices are increasing.” One of the store’s chocolate suppliers increased its prices by 11 per cent in the last year.

The global chocolate industry is reportedly worth more than $100 billion US. But with cocoa prices hitting a record $10,000 US per metric ton on Tuesday, it’s likely that your Easter treats might look a little different this year, as major chocolate manufacturers look for creative ways to make chocolate less, well, chocolatey.

Priscilla Tallo, manager of The Chocolateria, is pictured in front of the store’s Easter display in Toronto’s Roncesvalles neighbourhood. She says the shop has had to raise their prices in response to high chocolate costs. (Nisha Patel/CBC)

Cocoa harvests threatened by disease, weather

Cocoa production is down by about 30 per cent this year, mostly due to atypical weather patterns, according to Sophia Carodenuto, an assistant professor at the University of Victoria who studies the cocoa supply chain.

“Too much rain, not enough rain, unpredictable weather patterns, but also disease,” Carodenuto said.

“Cacao is a very sensitive tropical tree,” and is predisposed to diseases like black pod disease and swollen shoot virus.

WATCH | Poor cacao harvests are making chocolate prices skyrocket: 

Poor cocoa harvests cause bitter price increase for Easter chocolate

2 days ago

Duration 2:02

Poor harvests of cocoa — the key ingredient in chocolate — have driven up prices of the raw material, and it’s showing up on store shelves this Easter.

Three years of poor cacao harvests have impacted production in Ghana and Ivory Coast. Processing plants, which transform cacao beans into the substance used to make chocolate, are increasingly unable to afford the raw material.

Farmers might be trying to plant more of these trees now, but the fruits of their labour might not be ready for quite some time. New trees will likely be harvested in three to five years, Carodenuto said.

Apart from a few areas that produce cocoa at an industrial scale, the cocoa is typically produced in a smallholder system, meaning that small-scale farmers are its main producers.

“These smallholder farmers are highly vulnerable,” Carodenuto said. “When you see these price shocks, it’s very unlikely that that is trickling down to the farmer and arguably the actor in the supply chain who would need this money the most.”

How will your Easter treats change?

A bunny-shaped chocolate treat is displayed at The Chocolateria. (Nisha Patel/CBC)

“I think for those that haven’t bought candy since, say, Halloween, the price of chocolate on the store shelves may be a bit of a surprise,” said Billy Roberts, a senior analyst of food and beverage at CoBank.

Cocoa futures — a type of trade agreement that allows an investor to buy or sell a commodity at a predetermined price on a future date — have grown “dramatically in recent months, all because of lower harvests than what producers were expecting in West Africa,” said Roberts.

“Long story short, their production last year was significantly, significantly below expectations, and this year is not looking much better.”

Chocolate makers will likely offer more snack-sized products, trimming the size of their candy bars to account for higher costs without having to charge more at the retail level, Roberts said.

Brands might also adjust their packaging — and they could shift their focus to developing chocolate recipes that have a lower cocoa content, like using white or milk chocolate instead of dark.

Hershey’s chocolate bars are shown in July 2014 in Chicago. Companies like Hershey’s and Cadbury parent Mondelez posted sales volume drops in the fourth quarter after raising their prices to contend with the cocoa crisis. (Scott Olson/Getty Images)

Major chocolate manufacturers stockpiled some cocoa last year to shield from rising prices, and some companies are still doing well: Swiss chocolatier Lindt posted a rise in annual profit earlier this month.

But the outlook has taken a bitter turn elsewhere. Companies like Hershey’s and Cadbury owner Mondelez reported that their sales volumes, or the amount of product sold, fell in the fourth quarter after raising their prices to contend with the cocoa crisis.

“Given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage the business,” said Hershey’s CEO Michele Buck in February.

Hershey’s has introduced a line of non-chocolate Easter treats, like cookies and cream treats, lemon KitKat bars and mixing in gummy bears in its assortment bags, though a spokesperson said these additions are not connected to rising cocoa prices.

Back at The Chocolateria in Toronto, Tallo says that it isn’t just cocoa impacting her bottom line. The store buys sugar, flour, butter, dairy products, nuts, cookies, marshmallows and dried fruit for its products — and some of those items are getting more expensive, as well.

The Chocolateria is trying to eat the costs where it can by rethinking packaging and sizes, and paring back on pricey ingredients, said Tallo.

But the challenge is with its star ingredient, first and foremost.

“It’s forcing us to look at our products differently, try and see how we can make things differently while keeping the quality the same.”

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Dollarama keeping an eye on competitors as Loblaw launches new ultra-discount chain

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September 11, 2024

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Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.

“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.

“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”

Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.

However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.

The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.

Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.

“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.

Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.

“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.

The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.

The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.

The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”

“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.

Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.

Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.

She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”

Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.

To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.

“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”

The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.

“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.

“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”

This report by The Canadian Press was first published Sept. 11, 2024.

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U.S. regulator fines TD Bank US$28M for faulty consumer reports

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September 11, 2024

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TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.

The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.

It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.

CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.

TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.

The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.

This report by The Canadian Press was first published Sept. 11, 2024.

Companies in this story: (TSX:TD)

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Amazon rejects plea to stop selling taxi roof signs as cab scam spreads across Canada

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2 days ago

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September 10, 2024

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After a long day at a work event in July, Kathryn Kozody was relieved when she spotted a car with a lit-up taxi sign.

She thought it was odd when the driver told her she’d have to pay her fare with a debit card. Still, a tired Kozody hopped in the car.

“I was like, ‘Fine, it’s kind of weird, but let’s go home,'” said Kozody, who lives in Calgary.

Nothing else seemed off — until the next day when she discovered that almost $2,000 was missing from her bank account. On top of that, her debit card had someone else’s name on it.

Kozody concluded that the taxi driver was a fraudster who, during the debit card transaction, recorded her PIN, stole her card and handed her back a fake.

“I started freaking out,” she said. “It’s terrifying when they have your debit card.”

It took Kozody about two weeks to get her money back from her bank, and she’s still rattled by the experience.

The day after taking what she thought was a ride in a taxi, Kathryn Kozody of Calgary found out someone had withdrawn almost $2,000 from her bank account. (James Young/CBC News)

“It really felt like an invasion of privacy and a violation to be a victim of this scam,” she said. “I really don’t want it to happen to anybody else.”

The taxi scam isn’t new; Toronto and Montreal have been seeing it for years. But the crime is becoming more widespread.

This summer, police in Calgary, Edmonton and at least five cities in southern Ontario, including Kingston and Ottawa, posted warnings online that they had received multiple reports of the scam.

Police and the Canadian Taxi Association say the fraudsters have a helping hand: with the click of a button, they can purchase a generic — but official looking — taxi roof sign on e-commerce sites like Amazon.

Edmonton Police posted this alert on Facebook in July, warning people about an ongoing taxi scam. The city’s police department says that it received about 10 reports of the scam that month. (Edmonton Police/Facebook )

The taxi association has asked Amazon, by far Canada’s most popular online shopping site, to stop making the roof signs so easily available.

“They do have a moral responsibility to at least sell the signs to individuals that are properly licensed,” said association president Marc André Way.

However, the U.S.-based company continues to sell the product to all customers.

“These lights are legal to sell in Canada,” Amazon told CBC News in an email.

‘Eye-popping’ numbers

The taxi scam has several variations but typically ends the same way: the victim pays with a debit card, then the scammer secretly steals it and hands the victim a similar but fake card. Shortly thereafter, money disappears from the victim’s account.

Ron Hansen, deputy chief of police in Sarnia, Ont., said his department received 12 reports of the scam in July, with one victim losing $9,900.

Toronto police report that since June 2023 the department has received 919 reports of the taxi scam, totalling $1.7 million in losses.

Jessica Chin King of Toronto said after a recent cab ride, she got a suspicious activity alert from her bank. She learned $600 had been withdrawn from her account. (Craig Chivers/CBC)

The numbers are “eye-popping,” said Toronto police detective David Coffey.

“When they do get a victim, they are quick to go right into the bank accounts. They’re quick to empty them out.”

Jessica Chin King of Toronto said just 15 minutes after a recent cab ride, she got a suspicious activity alert from her bank. Turns out, $600 had been withdrawn from her account.

“I was like, ‘Wow, I can’t believe that just happened.’ I was in shock,” said Chin King, whose bank later reimbursed the cash.

She said she too was fooled by the taxi sign atop the car.

“I was in the car with somebody who wasn’t a taxi driver. Anything could have happened,” she said. “I was thankful that it was only my bank [account] that was compromised.”

Taxi light for $35 on Amazon

CBC News bought a taxi sign from Amazon for $35. It has a magnetic strip on the bottom, so it easily sticks to the top of a car.

To power the light, an attached wire can be run through the driver’s window and plugged into the car’s auxiliary power outlet, also known as the cigarette lighter outlet.

The taxi association says licensed taxi drivers typically get their roof signs from speciality suppliers, and they are hardwired to the car — not powered via the cigarette lighter.

“When you see that … it’s obvious that it’s not a legitimate taxi,” said Way, the association president.

Last month, Way sent Amazon a letter on behalf of the Canadian Taxi Association, asking it to stop selling the product.

“This is not a safe, practical way to distribute the trusted ‘Taxi’ signs,” he wrote.

CBC News ordered this $35 taxi sign on Amazon. The attached wire can be run through the driver’s window and plugged into the car’s auxiliary power outlet, while the lights for licensed drivers are hardwired into the vehicle. (Sophia Harris/CBC News)

But Amazon told Way — and CBC News — the signs will remain on its site, because the company isn’t breaking any rules.

“It’s going to be quite difficult, I think, for anyone to stop Amazon from selling a product that is perfectly legal to sell,” said Toronto criminal lawyer, Daniel Goldbloom. “It’s true that these taxi signs can be used to commit scams, but kitchen knives can be used to commit murder — and we don’t stop retailers from selling those.”

But Way isn’t giving up hope.

He says the taxi association also plans to ask other online retailers, such as Temu and eBay, to stop selling the taxi signs and will lobby provincial governments for legislation that regulates the sale of the product.

However, Coffey said he believes the best way to fight the taxi scam is to educate people about it.

“Never, never give another person control of your debit card,” the detective said.

Victims Chin King and Kozody also want to spread the word.

“The more people know, the less likely it is to happen again to somebody else,” Kozody said.

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