Cocoa Prices Drop 66%, Yet Chocolate Costs Rise; Government Reviews Confectionery Pricing

The South Korean government has launched a pricing structure review of the confectionery industry, including chocolate manufacturers. The move comes amid concerns over a widening gap between raw material costs and consumer prices, with retail prices rising despite sharp declines in international commodity costs.

According to government sources on the 18th, the Ministry of Agriculture, Food and Rural Affairs has been holding working-level consultations with confectionery companies regarding price trends and raw material costs. While officially aimed at reviewing industry trends including raw material prices and production costs, observers note the discussions are likely to lead to price reduction talks for certain products, similar to recent cases involving instant noodles and cooking oil.

Price cuts have followed previous government engagement with industries. Four instant noodle makers recently reduced prices by 4.6% to 14.6% on average, while six cooking oil companies plan to cut prices by 3% to 6%. The government's price stabilization policy is spreading across the processed food sector.

Chocolate products are expected to be a primary focus of this review. President Lee Jae-myung himself raised the chocolate pricing issue at a Cabinet meeting last year.

Cocoa prices, the key raw material for chocolate, have indeed fallen rapidly. According to Investing.com, international cocoa futures peaked at around $10,000 per ton in May 2025 but have since dropped more than 66% to approximately $3,389.

Consumer prices, however, have moved in the opposite direction. Data from the Korea Consumer Agency shows that Lotte's "ABC Choco (187g)" rose 13.46% at large supermarkets, from 6,124 won on May 23 last year to 6,948 won at the end of February this year. "Big Ghana Mild (110g)" also increased 6.74% during the same period, from 4,157 won to 4,437 won. The gap between production costs and consumer prices has widened as product prices rose even while raw material costs declined.

Industry observers suggest price adjustments may spread across the broader food industry amid the government's price stabilization stance. Haitai Confectionery recently announced price cuts of approximately 4% to 5% on select biscuit products including "Egg Snack Bebepin."

An industry official said, "Food prices reflect various factors including exchange rates and distribution costs, not just raw material prices," adding, "Given the significant burden of inflation, government pressure for price stabilization is likely to continue for some time."

Meanwhile, the Bank of Korea reported that import prices rose 1.1% month-on-month in the previous month, marking eight consecutive months of increases. This was driven by international oil prices rising approximately 10% from the prior month. Import price pressures are expected to have intensified further in March following additional oil price surges after U.S. airstrikes on Iran.