With chocolate-market leaders such as The Hershey Company recently raising their prices of chocolate to combat rising cocoa prices, smaller businesses are left uncertain and wondering if they can do the same. One such business facing this dilemma is Two Friends Chocolates on Mass. Ave. in Boxborough.
According to Forbes, the collision of climate change, increased demand, and supply chain disruptions has increased cocoa prices. Because of climate change, not only are equatorial temperatures higher but humidity as well. This has created unfavorable conditions for cacao trees. Furthermore, geopolitical instability has made cocoa more expensive to export. Lastly, according to Forbes, as disposable incomes rise, especially in emerging markets, demand also rises. The concurrence of these factors has caused cocoa prices to skyrocket.
Lavanya Selvaraj puts finishing touches on caramelized fig chocolate truffles and packs them into a tray for display. (Photos by Jen Manell)
“It’s currently at the point like, ‘OK, what am I going to do now?’” Lavanya Selvaraj, owner of Two Friends, told the Press.
Two Friends walks a fine line between setting costs that will maintain their loyal customers while also battling cocoa prices that have almost doubled since Selvaraj and her business partner, who operates a Two Friends store in Canada, began four years ago. And the price of cocoa is only continuing to rise.
Although costs have risen dramatically, Selvaraj said she cannot double her prices, because there is a limit to what people will spend, especially with inflation and rising prices everywhere.
Selvaraj said most of their sales come from wholesale customers, such as Whole Foods Market, the Isabella Stewart Gardner Museum, and other small local businesses. Along with this, they have started making hot chocolate and other drinks for people to come in and then enjoy at their outdoor seating.
Selvaraj said she wants to bring together the community and have a place where people can get a treat for themselves or a loved one. In return, she said she has had lots of support and business from the surrounding community.
However, being a local chocolate shop, they are very small players within the chocolate industry. Selvaraj said they cannot compete price wise with the big players because for those companies, chocolate is just a commodity produced in large quantities in factories. Selvaraj’s process is much more time-intensive, as she handmakes, paints, and wraps each piece of chocolate in her shop.
Furthermore, Selvaraj said all of their cocoa is imported from Europe. As cocoa does not grow in Europe, this means Selvaraj is essentially paying double the export costs as compared to many industry leaders who source their cocoa from farms in South America and Africa. On top of this, Selvaraj is also paying increased export costs due to tariffs placed on goods from Europe.
Handcrafted chocolate truffles fill a display case at Two Friends Chocolates.
In a conference call with investors in mid-July, Frans Ryden, the chief financial officer of northern Europe’s leading confectionery company, Cloetta, said cocoa prices and conditions are changing so fast and moving up and down all the time, so it is difficult to predict future prices.
Selvaraj said while all businesses struggle with inflation, many of them are combining ingredients to increase their value. With a product like chocolate, where nothing else is added, the hike in prices hits hard. Selvaraj said they are struggling, but she is hanging in there and hoping the prices will eventually level off.
“Even with all the pressure, this is what I like,” Selvaraj said.
Marley Smith is a student intern at the Press. She attends Northwestern University.
