The 175-year-old Swiss company Lindt & Spruengli is one of the world’s 10 biggest chocolate manufacturers, with 2018 sales of some $4.5bn

It has won environmentalist accolades for its zero deforestation policy and providing full traceability for its cocoa beans.

But despite its cute foil-wrapped chocolate bunnies Lindt is running a tight ship with strong net profitability - which rose by 5.1% to 511.9m Swiss francs (about $535m) in 2019.

And in its view the price of chocolate is ’inevitably’ going to rise for all chocolate manufacturers thanks to the state-funded premiums being introduced this year in Ivory Coast and Ghana, which together account for some 60% of global cocoa output.

Premium designed to combat farmer poverty

For cocoa bean sales in the 2020-21 season the two west African countries plan to impose a $400-per-tonne premium, called the ’Living Income Differential’ or LID.

While various large chocolate manufacturers have publicly backed the scheme there have been reports that some cocoa traders have been delaying buying 2020-21 season’s cocoa beans and are resisting paying the higher price that the premium entails.

A ’big pit’ between words and deeds

Reuters quoted last December an anonymous source at Ivory Coast’s cocoa regulator as saying "I cannot complain about an (LID) boycott, but between what the industry says and what it does, there is a big pit. It seems (industry players) are waiting for a (price) decline to buy."

In forecasting higher prices for chocolate based on the LID premium, all that Lindt may be doing is being strictly honest about what it sees going on in the market.

When a basic ingredient goes up in price, manufacturers can either absorb the costs or pass them on to consumers.

When cocoa prices have spiked in the past however, confectioners have subtly reduced the size of their products and this may happen again.

Reports from Ivory Coast meanwhile, where the main crop harvest is tailing off, suggest that heavy rains are needed in the country’s main cocoa-growing region to avert forthcoming mid-crop losses.

Such farmer anxieties are not unusual at this time of year however. Weather forecasts anticipate sufficient rainfall for a good mid-crop.

With most analysts expecting a market in approximate supply/demand balance for 2020-21, any supply disruptions would send futures’ prices much higher.