Hazelnut prices were up 50% last week compared to the start of the year to £6,059 per metric ton (MT) after frost in the main producing nation Turkey damaged the global supply.
“Prices are currently high due to continued concerns over the frost in March, however the next harvest is due to commence in August and this should hopefully ease prices, although I would expect to remain firm as the full extent of the damage will not be known until the end of the harvest period,” Corrina Savage, market analyst at Mintec told ConfectioneryNews.
Confectioners and hazelnuts
The chocolate industry is a big buyer of hazelnuts. In the US, the world’s largest chocolate market, chocolate with hazelnuts was a $21m category last year, up 16% on the previous year, making it bigger than the white chocolate segment.
Ferrero is the world’s largest hazelnut buyer. It recently acquired Turkey’s largest hazelnut processor Oltan to improve supply of hazelnuts for its products including Nutella, Ferrero Rocher and Kinder Bueno.
Rising costs for other commodities, particularly cocoa, have already led big players such as Mars Chocolate North America, Hershey, Mondelēz and Nestlé to raise wholesale confectionery prices.
Average daily cocoa prices for July 2014 were 38% higher than the same month last year at $3,196, according to the International Cocoa Organization (ICCO).
Nestlé said during its first half results earning call earlier this month that pressure from rising cocoa costs were behind its continued decline in operating profit margins for its confectionery segment.
Cocoa accounts for around 14% of a chocolate confectionery company’s manufacturing costs, which are mostly dedicated labor and processing costs, according to Euromonitor International.