Confectioners have caught a lot of flak for cutting the size of chocolate products - but an 80% hike in the cost of cocoa butter since June means it’s a practice they are unlikely to stop.

The Grocer revealed in August that Nestlé had reduced the size of its tins of Quality Street from 1kg to 820g - and last week the Office of National Statistics estimated the average size of confectionery products had dropped by an average of 10% over the past year.

The reduction in pack sizes came despite a 45% drop in cocoa butter prices in 2011 - so now, with the cost of the main ingredient in chocolate rising to more than £2,800 this year [Mintec], it seems likely confectionery products will continue to shrink - or prices will rise.

UK feed wheat prices up

Poor harvests and a predicted 5% year-on-year drop in global production have pushed up UK feed wheat prices to £220.5/tonne, 7.6% higher than last month and up 48.8% on this time last year.

At £2,707/tonne, cocoa butter is almost 80% higher than last year, having moved up 4.4% in the past month as the market responds to reduced cocoa grindings and lower demand for cocoa powder in Europe and the US in Q2 of this year.

Arabica prices are 34% below last year, having fallen 6.9% in the past month in response to expectations of a good Brazilian coffee harvest, while world sugar prices are down nearly 20% year-on-year and 5.7% month-on-month because of a predicted 2% increase in global production.

The price of cocoa beans themselves have increased by a relatively modest 15% this year to nearly £1,600 a tonne as global production of cocoa fell 8% during the 2011/2012 season.

The rise in the price of cocoa butter - produced alongside cocoa powder when the beans are ground - was primarily fuelled by a slowdown in demand for cocoa powder.

In previous years, processors produced excess cocoa butter to satisfy high demand from Asia for cocoa powder. This year, when powder demand slowed, processors reduced production and used up their inventories, leading to a shortage of butter and, consequently, higher prices. This was exacerbated in the autumn when the seasonal demand ahead of Christmas put further pressure on prices.

And it is feared the coming year could bring further price increases. Early forecasts are for a world production deficit for the 2012-2013 season due to a lack of rainfall in West Africa.

Demand was key and difficult to predict, said Mintec analyst Jara Zicha. “Prices will depend to a large extent on the future economic situation across the globe,” she added.