Latest / Financial Survival Network / The Bittersweet Truth: Chocolate Prices on the Rise Due to Climate Change - Carl Gould #6032

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The Bittersweet Truth: Chocolate Prices on the Rise Due to Climate Change - Carl Gould #6032 · Financial Survival Network

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  If you think about the average consumer of chocolate, you know, when you
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  buy chocolate, what are you buying it for? And it's usually fools in
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  two major categories. One is for personal consumption and two is for gifting.
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  And so if you're buying it for your own personal consumption, you're likely to
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  going to continue to buy the things that you enjoy, that you like because
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  you're buying it for your own personal use. You're listening to Carrie Lutz's Financial
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  Survival Network where you get valuable information you just can't find anywhere else to thrive
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  in today's trying times. You need the Financial Survival Network now more than ever.
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  Go to Financial Survivalnetwork dot com and get your free newsletter in gift Financial
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  Survival Network now more than ever. And welcome you are listening to and watching
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  the Financial Survival Network. I'm your host, Carrie Lutz. Well, why
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  is the price of chocolate so damn high? Is it all Trump's fault?
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  Is it the government's fault? Who is behind this? Our good friend Carl
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  Gould is with us now. You find it at carlgould dot com. Link
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  is in the show notes. Questions comments, just shoot me an email k
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  l at Kerry LEDs dot Comcarl, welcome back. So the price of chocolate,
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  Man, if you're a chocoholic like me, you noticed it keeps going
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  up, up, up and away. Well, and if you're looking for
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  somebody to blame, you can blame that El Nino weather pattern which is putting
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  a strain on agriculture in West Africa, specifically the production of cocoa, which
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  is a main commodity and ingredient in the finished chocolate product. So a climate
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  change, or call it weather patterns or cyclical weather patterns or putting a real
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  strain on farmer's ability to manufacture and harvest coco. All right, So wherever
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  the climate change is coming from, that's irrelevant. We know it's here and
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  it's having an effect. But Carl, you know the best cure. You
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  know what The best cure for high prices is high prices. Yeah, it's
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  just like the best cure for low prices, low prices. So demand is
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  going to be cut down. You know, you get the candy bars that
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  you and I had as a kid, and they have very little chocolate left
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  in them. I'm talking like the baby Ruth bars, the butterfinger, the
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  raisinets, and they used to have real chocolate. Now it's got just some
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  kind of pob up butter or some garbage like that. But it really Hey,
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  if they want to cut back on chocolate consumption, keep lowering the quality
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  and that'll work, wonders Right. Well, yeah, I mean if you
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  think about the average consumer of chocolate, you know, when you buy chocolate,
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  what are you buying it for? And it's fools in two major categories.
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  One is for personal consumption and two is for gifting. And so if
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  you're buying it for your own personal consumption, you're likely to going to continue
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  to buy the things that you enjoy and that you like because you're buying it
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  for your own personal use. But how many how often do you buy chocolate
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  and then it goes into the candy bowl on the counter, or you give
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  it as a gift to somebody else. When it comes to that, you're
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  going to start to see, you know, people not buying name brand,
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  buying the store bought brand, and buying in bulk. Absolutely, absolutely,
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  yeah. So the what economic economists call the law of substitution. When steak
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  gets too high, substitute chicken. When chicken gets too high, you substitute
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  spam and then when that gets too high, I guess you use ketchup and
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  make tomato soup. Right, It's something like that pretty much. But you're
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  because you're when you have a product like this, and it's a discretionary purchase
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  in almost all cases for me. When not, but that's distractionary for me.
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  I'm addicted to the stuff. It is an absolute staple in your diet
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  and it's a required purchase. Well, you're gonna have to be very careful
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  another Well, there you go, right, So for you not an option.
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  Right, So chocolate companies ought to be talking to you directly because that's
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  where it's at. And and so yeah, you know you're going you're going
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  to see continued prices being reasonably high, especially in the States, because there
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  are policies in place now that require chocolate United States chocolate manufacturers to use US
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  sourced ingredients, you know, some sugars and some other ingredients. And so
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  because it is it is more expensive to produce that here in the States,
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  the cost of chocolate is always going to be a little higher here in the
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  US. So if you're buying and it's a little bit more expensive, you
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  at least know that you're supporting an American business. Yea, involuntarily so,
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  but not correct. But what is it that maybe you know, a nickel
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  to the cost of the candy gore? Well, it could be. It'll
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  vary depending on the size and weight of each one. But yeah, and
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  is it enough that it's going to make you stop making the purchase? I
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  don't think so. You know, when you know we've all done this when
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  we want a piece of chocolate, we are getting a piece of chocolate.
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  I'm not so sure we're looking at the price all that much. And if
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  something is two ninety nine instead of two seventy nine, I think we're still
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  buying it, you know. Interestingly enough, I'm doing my Internet search,
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  which I should have done before. Chocolate is a highly regulated substance. Different
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  to countries require different amounts, Like in the US, for something to be
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  labeled as chocolate, it must have a minimum of ten percent cocoa in it.
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  But in Canada it's twenty five percent for milk chocolate, and in Europe
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  it's thirty five percent, So you're always better off getting the European chocolate anyway,
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  You know, you when you now you have a new reason to go
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  through those duty free shops and when you're in the airport, you go grab
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  that NOI House chocolate, so the Godiva or one of the other you know,
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  brands that you'll be able to buy at the airport, and yeah,
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  load up because it'll be a lot more coco in it. So what's really
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  funny is they now regulate white chocolate starting in two thousand and two, and
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  it has to have it's not really chocolate, white chocolate, but it has
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  cocoa butter, and in the US got to have twenty percent cocoa butter.
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  And the whole world's regulating chocolate because because of the rising costs, carl businesses
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  seek to lower their costs. And how did they do it. They cut
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  back. So they're going by these rules came into effect. Well, they're
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  going to have to get more creative in the ingredients and in the taste that
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  they provide, because at the end of the day, you're producing a product
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  that delivers a certain experience, right experience, a packaging experience, you know,
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  and an eating experience. You know. They say that you eat with
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  your eyes first and your stomach second. Right, So, so the as
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  long as the other elements of the experience are there that that plays into how
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  much people some people are going to enjoy it, you know, And so
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  you're if you're if you're any business and you have to deliver in a similar
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  experience with less resources, you get creative and and that's what we're seeing here.
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  So you know, they say, Carl that eating chocolate makes you feel
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  like you're in love. Uh so people are doing it for that reason,
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  then they don't care about the price. Right. Look, in most cases
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  that is exactly right. You're especially if you're buying you for yourself or somebody
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  and it's a special gift you're gonna pet, You're going to buy no matter
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  what the price. Where you're going to see people spend less is around the
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  holidays Eastern I mean they're going to buy more candy, but they're going to
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  go for the bulk purchase. They're going to go for the store brand as
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  opposed to the name brand. You know, they're going they're going to chip
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  in with somebody else and instead of me buying my Eminem's and you buying your
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  Eminems, we're going to get together and buy the economy pack. Those are
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  the sorts of things that are going to start happening because people are going to
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  have to budget how much they spend on what is gifting. You know,
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  like this is a huge industry too, chocolate tens of billions of dollars.
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  Back in twenty sixteen, it was twenty eight billion a year, and you
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  know it's it's going higher. I guess as population increases. But again the
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  prices get too high. You know, somebody elite the Jolly Ranchers instead,
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  right, I wouldn't think, well, yeah, ranchers is being a substitute,
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  but who knows, maybe can be the when you get when you see
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  you to draw a parallel. You saw this in Major League Baseball when when
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  the Yankees and the Mets and all the the Los Angeles Dodgers and all these
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  teams started charging outrageous prices to pay their players more. What started to happen
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  was the minor leagues got more and more popular, and it spawned other leagues.
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  Same thing with the NFL and now you know the XFL and the USFL.
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  When a price of something gets out of reach, it creates room for
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  another category. So what you're likely to see is, you know, the
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  chocolate will if the prices continue to rise, it will create its own category,
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  and another category will slide in below it be that economy, be that,
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  be that some sort of economy or value type product. Hey, so
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  you know and that is so true, Like look at how much it costs
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  to go to Disney, right you don't think families are picking other options?
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  Like hey, correct, that's to go camping. You know of what a
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  Disney vacation will set you back and credit card debt. All that figures into
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  this, right, you take this. Disney is a great example. Disney
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  and the other parts get more expensive. So what happens. It spawns an
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  entire industry called the family entertainment center. And they're local, they're in your
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  they're within a twenty to thirty minute drive of your location. They're one tenth
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  of the size, but they're also one tenth the price. And so that's
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  an entire industry that was spawned because the amusement industry got too expensive. And
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  now it's a destination. It's not necessarily a go and do every single year.
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  Yep, yep. So somehow with everything that happens, the economy figures
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  out a way to continue on. It's human behavior, right, people are
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  going to adapt the higher prices. Look, when the price of gasoline spiked
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  in the seventies, and I remember this vividly. What happened. People didn't
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  drive as much on the weekends, they car pooled. You got these car
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  pool lanes and then the car has got smaller. Arguably that introduced other risk
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  factors into it all. But when you get down to it, hey,
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  what happened? You know it just the people adapted and the costs came down.
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  So you know that's right when you always hear people crying about higher price
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  and this higher price of that, generally, if the government keeps his hands
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  off the out of the off the scale, prices are going to adapt.
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  And you know what, bit what more fair away is there to allocate a
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  good than cost? Yeah? I mean you if you hear the story of
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  a successful entrepreneur and they tell you why they got into the business, of
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  why they did it and what drew them to that industry, is that they
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  sold a problem. They saw a need that they could fulfill or a problem
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  that they can fix. And in this particular case, someone's going to say,
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  you know, the chocolate, it's got too expensive. I saw a
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  hole in the in the industry that I wanted to fill, and so I
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  came out with this ABC product. And here we are now with this new
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  business that's very innovative and very entrepreneurial. It's You're absolutely right. The free
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  market system will take care of it. It might be a temporary inconvenience that
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  the prices are high, but entrepreneurs are going to step in and they're going
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  to create a product that'll fill that price that price level. Yep, exactly.
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  Could not agree with you. Mark. Hey, Carl, we find
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  you still at Carlgoul dot coms wait to find me all right, I've got
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  a question for Carl and myself. Email KL at Carrie Lets dot com.
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  We'll get you an answer real quick. The link to carl site is in
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  the show notes of this interview on Financial Survival Network dot com. Go there,
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  sign up for your for your newsletter. Carl. Always a pleasure,
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  Thank you and be well. HKS Kerry, enjoy that chocolate. Thanks for
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  listening to Carrie Let's this Financial Survival Network allution to today's trying times. For
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  the latest, go to Financial Survivalnetwork dot com. Financial Survival Network now more than ever