😨 Chocolate Farming Is Facing A Crisis Affecting Your Favourite Brands

📰 Industry News

• Super ATMs are going on trial in the UK, allowing customers to both withdraw and deposit cash into their banks. (The Guardian)

• A court has ruled that Google must face a £13.6bn lawsuit alleging it has too much power over the online advertising market. The case argues Google acted in an anti-competitive way, causing UK online publishers to lose money. (BBC)

• Abercrombie & Fitch has reported a surge in profits after an ‘outstanding’ first quarter, with net sales reaching £790 million, up by 22%. (Retail Week)

• GameStop stock has surged over 70% to $40 apiece after the investor known as ‘Roaring Kitty‘ claimed a sizeable stake in the video game retailer. (BBC)

• Fast-fashion giant SHEIN plans to launch an IPO on the London Stock Exchange that could value the business at around £50 billion (Shares Magazine)

😨 The Crisis Affecting UK Chocolate Supplies

Chocolate lovers, brace yourselves!

The price of your favourite sweet treat is on a steep rise, and the reasons behind it are more complex than you might think.

From crop difficulties to financial speculation, the journey of the humble cocoa bean to your chocolate bar is fraught with challenges. Let’s dive into the ongoing crisis causing your chocolate to cost 30% more.

How Much Is Cocoa?

• In April 2023, one tonne of cocoa beans cost £2,100. Today, that same amount costs £5,800, marking a dramatic tripling in price within a year.

• Cocoa makes up a significant portion of chocolate bars, especially dark chocolate, which contains up to 85% cocoa. This price spike is set to significantly impact retail prices and availability.

Complex Causes Behind Cocoa Shortages

• Cocoa farming is challenging, with crops taking 4-5 years to mature. This inflexibility means farmers can't quickly increase supply in response to demand spikes.

• Most cocoa is grown in Ghana and Ivory Coast, regions challenged by political instability and regular economic uncertainty, further complicating production.

• The crop is also highly susceptible to black pod disease, which, coupled with unusually wet weather in West Africa, has devastated yields this year.

Financial Speculation Exacerbates the Crisis

• Cocoa's relatively small market size makes it vulnerable to price manipulation. Hedge funds have speculated on cocoas future, driving prices even higher.

• Notably, a hedge fund managed by former Merrill Lynch trader Paul Mulvaney capitalised on the rising prices, contributing to market volatility.

What This All Means for the UK and Chocolate

For UK consumers, the repercussions of this cocoa crisis are already visible amidst the ongoing cost of living crisis. Brands like Lindt and Green & Black's have increased prices by over 30%, and own-brand chocolates have seen even sharper rises. Retailers are also shrinking product sizes to mitigate price hikes - known as shrinkflation - a trend likely to continue.

Just as we’ve seen in the energy sector in the last few years, the soaring cost of cocoa underscores the need for a more stable and diversified supply chain. While efforts have been made, such as Cadbury's investment in Indian cocoa farming, these initiatives have yet to yield significant results. For now, the best hope lies in favourable weather conditions in West Africa.

The situation remains uncertain, and manufacturers will do all that they can to avoid the need to increase prices. Only time will tell whether they will.

💷 King Charles lll Banknotes Now In Circulation

Banknotes featuring a portrait of King Charles III are now in circulation throughout the UK. The portrait of the King appears on existing designs of all four banknotes (£5, £10, £20, and £50).

Banknotes that feature the portrait of Queen Elizabeth II will remain legal tender and are co-circulating alongside King Charles III notes. The Bank of England also said that as the Queen Elizabeth II notes remain legal tender, there is no need to exchange them.

However, as many of you will be interested in seeing the new notes, temporary facilities have been put into place to allow people to obtain a limited value of the new notes via the Bank of England website.

🛒 Tesco's Launches New Online Marketplace Competing With Amazon

Tesco has unveiled a full-scale online marketplace, offering thousands of third-party products alongside its grocery range. This strategic move aims to transform Tesco.com into a comprehensive one-stop shopping destination for its customers.

What We Know:

• Launch Details: The new marketplace, which went live on 4th June, features around 9,000 products across categories such as garden, DIY, homeware, toys, and pet care. These products are available on Tesco’s website and app but are fulfilled directly by the suppliers.

• Quality and Monitoring: Tesco has vetted 17 initial sellers to ensure they meet stringent standards. These sellers will be continually monitored on various performance metrics, including delivery speed and customer ratings. Shoppers can earn Clubcard points on all purchases, though third-party items come with separate delivery fees.

• Growth and Integration: The marketplace, despite having a low-key launch, is set to expand rapidly over the summer with new sellers and products to maintain quality and trust. Unlike the previous Tesco Direct, this marketplace is fully integrated into the existing Tesco online shopping experience.

Competing with Amazon?

While Tesco says its marketplace is distinctly different from Amazon's, as it aims to offer a uniquely tailored shopping experience, focusing on quality and trust. UK consumers can look forward to a more diverse range of products with the reliability of Tesco’s established grocery business, potentially positioning Tesco as a competitive alternative to Amazon for specific categories. With Tesco’s good reputation in the UK, it could be an interesting time for the supermarket giant.

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