Chocilo gives inside look into boutique chocolate making after cocoa price tsunami
Bruce and Joanne Nethercote, the owners of boutique Melbourne chocolate seller Chocilo, say they will raise prices on their products twice this year to match the wild upward swing in cocoa prices over the past two years. Cocoa is the main input ingredient in chocolate.
'We've never had two price increases in a year, which we are doing this year,' Mr Nethercote told NewsWire this week.
'It's always been one (increase). For a small business, it's always a little unnerving to put your product up a couple time of year, but we just have to or we won't survive.'
Supply shocks in northwest Africa, the prime growing zone for cocoa, sent prices soaring from around $US3000 a tonne at the beginning of 2023 to more than $US10,000 a tonne in 2024.
'It's settled down a little, but it will never go back,' Mr Nethercote said.
'That has been the biggest direct impact on us.'
Chocilo buys chocolate in bulk and then crafts it into its own boutique products, like a pinata-esque offering called a 'chocolate smash cake'.
The big dome of chocolate is filled with lollies inside and people smash it at parties like children hitting a pinata, Ms Nethercote said.
Australia's sweet tooth has helped the business chug along, even as cocoa, freight, labour and packaging costs all rise.
'People still want to treat themselves,' Ms Nethercote said.
'They probably don't spend as much on themselves as they used to, but it's a treat for the parents to come in with their kids and buy a little dinosaur chocolate, spend $5 or $6.'
The small operators aren't the only ones increasing prices in response to the cocoa tsunami.
In its latest sales results from April, chocolate giant Nestle reported it had lifted prices 2.1 per cent to 'address input cost inflation in coffee and cocoa-related categories'.
'Despite the significant level of the increases in many markets, the actions were implemented with limited customer disruption,' the company said.
Looking forward, the Nethercotes, both aged 57, said it was time for the business to 'hunker down and consolidate'.
'We've been quite lucky in some regards, but it's been the right time at the right place with the right structure in place,' Mr Nethercote said.
'We've still got growth. Our boutique Chocilo brand is still growing, from an online and wholesale perspective. We're still increasing there.
'It's just the dynamics, or the type of product that the end consumer is really purchasing that has changed a little bit.'
There are also some gathering tailwinds for Australia's small businesses in the near term.
'We expect the business outlook to improve as strong labour market conditions and lower interest rates encourage consumers to spend and in turn help businesses grow,' ANZ economist Adelaide Timbrell told NewsWire this week.
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