Hot cocoa prices means less chocolate in treats

LONDON (Reuters) - Soaring cocoa prices, at 30-year peaks, could drive confectioners toward milk chocolate from healthier dark chocolate, and to downsize bars and use cheaper alternative ingredients.

Tight supplies and low investment by West African producers drove cocoa futures prices on the ICE market in New York to a 30-year high of $3,510 per tonne on December 16.

Chris Brockman, market research manager at consultants Leatherhead Food Research, said that during an economic downturn, confectioners would do their best not to hike chocolate prices in response to the cocoa market rally.

"We''ll see a move to less cocoa content," he said.

A recent shift in tastes toward dark chocolate, which has high cocoa content and is perceived to have health benefits, was likely to swing back toward milk chocolate.

"Dark chocolate has suffered substantially. It was a leading segment of the market," said Ricardo Santos, a senior cocoa trader with the agri-commodity brokerage of BNP Paribas Fortis.

Confectioners could leave prices unchanged but make smaller chocolate bars and use cheaper alternative ingredients, such as cranberries and blueberries.

"The incorporation particularly of ''super-fruits'' that have proven health benefits, has been prevalent," said Brockman.

This year, privately owned Mars cut the size of its Galaxy bars by 17 percent to 125g, after the shelf price rose 26 percent to 1.26 pounds ($2.02), according to Leatherhead Food Research.

Confectioners have revived brands, such as Cadbury''s Wispa, allowing them to slash advertising budgets compared with a new brand launch, and helped them tackle commodity price inflation.

COMPETITION