If Roald Dahl were to write his classic today, it would probably be called "Charlie and the Super Expensive Chocolate Factory."

This is because the price of cocoa beans (the raw material used to make various chocolates) is going to be very high due to many factors, and brands like Bengaluru-based Nivedita Prasad's are heading for the worst.

Nivedita, who trained at the prestigious Colebaut Chocolate Academy in Belgium, manages the 18-year-old craft chocolate brand 'Chocolate Philosophy'. Nivedita and her business are preparing for a situation where global chocolate prices are skyrocketing.

"Since we have some stock with us now, we will not have to increase the price all of a sudden. But by the next financial year, prices will definitely start impacting our margins, "the co-founder says.

Many brands around the world and in India are not as lucky as Nivedita. Some manufacturers, like Mars, will have to either reduce the size of their chocolate bars or - like Amul - increase the price of their dark chocolates. Others, according to a report by JP Morgan, may need to use milk solids or dry fruits instead of cocoa butter.

The price of cocoa beans has risen since October last year. For the first time, cocoa (roasted cocoa beans) is now worth more than $10,000 per metric ton - a 3-fold increase in just six months. The reason for this high price is the poor harvest in Ivory Coast and Ghana, the world's largest cocoa producers. A combination of factors, including drought due to climate change, abnormal weather due to El Nino, fungal black pod disease, and tree ageing, have led to lower yields and higher prices.

In fact, Ivory Coast's cocoa regulator, Le Conseil Café-Cacao, has suspended future cocoa sales for the 2024/25 season until it has a clearer picture of expected cocoa production.This has affected the supply.

The steep price hike in raw ingredients has alarmed India's burgeoning craft chocolate industry, leaving many chocolate makers with no choice but to pass on the cost to consumers.

Distinct Origins, one of Asia's largest fine-flavoured cocoa processing plants, is among those bearing the brunt of the price rise. They procured the raw beans from farms near the Godavari river in Telangana at Rs 820 per kg on April 3, compared to Rs 250 for most of December.

Investors are also raising their prices. A JPMorgan report reveals that non-commercial investors now hold 60% of the total open interest in cocoa futures and options, the highest in the history of the New York market.

"The merchandise is now being sold by people who have nothing to do with chocolate," opines Chaitanya Muppala, head of Distinct Origins, founder and CEO of Manam Chocolates, a chocolate brand.

These changes in the market are forcing companies to make difficult decisions. Mumbai-based clean label direct-to-consumer (D2C) food brand, Whole Truth, has stopped the production of milk chocolates and increased the price of dark chocolates from Rs 200-299 to Rs 299-375, according to a report in The Financial Express.

Opportunities in adverse circumstances

Many chocolate makers, including craft chocolate firms, are now turning their attention to domestic farmers.

In India, it is grown in Andhra Pradesh, Gujarat, Karnataka, Tamil Nadu, Orissa and West Bengal. The cacao plant was introduced to the country by British confectionery giant Cadbury in the mid-1960s.

For Karthikeyan Palanisamy, co-founder of Regal Plantations, the price hike is a missed opportunity as most of this season's produce from his cocoa plantation, spread over 45 hectares in Tamil Nadu, has already been sold. However, the brand, which is more than three decades old, has big plans.

"It is not such a big setback for us because of the high quality of our products, which we are already selling at a 10% premium to the market price," says Palaniswami.

He sees this situation as a great opportunity to export these beans to the old age markets. After being recognized at international fairs and conventions for its taste and aroma of beans, Regal Plantations today exports 35 tons, a quarter of the crop, every year to Michelin starred restaurants in Europe.

Most Indian farmers produce for large multinational companies like Mondelez and small marketing cooperatives like Campco, says Muppala of Distinct Origins.

"Our aim is to improve the reputation and create demand for cocoa beans produced in India at the international level so that farmers can make the most of their produce," Palaniswami added.

Craft chocolates in the spotlight

Muppala expects the opportunity for craft chocolate brands to grow as confectionery giants will change the content of cocoa in their chocolates to overcome the effects of price hikes.

"People are willing to pay a premium for good quality, premium chocolate. It will also allow Indian farmers, who remain on low wages, to demand a fair price. The Indian cocoa sector is unique; it is deforestation-free and child labour-free, "he adds.

In 2013, companies like Soklate from Tamil Nadu (a craft chocolate brand under Regal Plantations), Naviluna from Karnataka and Mason & Co from Puducherry decided to invest in better quality products and make craft chocolate candies using Indian cocoa.

This initiated the "bean-to-bar" movement in India, in which chocolate makers such as Manam began to engage in all stages of chocolate production, from cultivation, fermentation testing, drying, to the marketing of the finished product.

Many industrialists believe that there will be some changes in cocoa prices, but they will not fall to pre-December prices anyway. In addition to raising the price of craft chocolate confections in chocolate, Regal Plantations is now trying to divert a larger share of its cocoa bean crop to exports.

Muppala hopes that if the price of mass-produced chocolate products increases, people will become more aware of the chocolates they eat, which will increase the demand for craft chocolates. He has not yet planned to increase the prices of his products and is waiting to see how the prices will change in the next couple of months.

"We expect more and more people to turn to specialty and craft chocolates if the prices remain high," he adds.

Last season was the second full harvest for Manatee and Distinct Origin. Muppala has plans to export fermented and dried cocoa beans to chocolate makers, but he's not entirely sure how much that will boost margins.

"We have created demand for our products, that's for sure," asserts Muppala.