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Capitalism and the price of chocolate

By   /  February 24, 2015  /  46 Comments

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From a previous blogpost published on 4 July 2013, in The Daily Blog


The Price of Cocoa (2013)


Three cans of cocoa tell an interesting story.

Can A is the oldest, with an expiry date of April 2011. The can measures 110mm (H) x 75mm (D). It contained 200g net dry cocoa powder.

We purchased Can B sometime  in 2011 (?). The expiry date was March 2012, so it’s the second oldest can.

Interestingly, it also contained 200g net dry cocoa powder. However,   whilst the contents remained the same as Can A – the dimensions of the can inexplicably increased; 130mm (H) x 75mm (D). Same diameter as Can A – but 20mm taller. Contents remain the same net weight.




A month ago we purchased Can C (expiry date, March 2015). The dimensions of this can is the same as Can B: 130mm (H) x 75mm (D). But this time, the contents decreased from 200 to 190g net dry cocoa powder. Ten grams less.




So the up-shot? The can-sizes have gotten bigger – whilst the contents has reduced by 5%.

On 9 June, I emailed Nestle to find out what was going on,

Kia ora,

It has recently come to my attention that two cans of Nestle Baking Cocoa measure 110mm X 75mm, whilst the other measures 130mm x 75mm.

Both contain 200g net  cocoa powder.

The smaller can measuring 110 x 75 has a “best before” date April 2011.

The larger can, 130×75 has a “best before” date March 2012.

It appears that you have increased the SIZE of the can, whilst the contents remain the same.

Is there a reason why the size of the cans  was increased, by 20mm in height?

And can you confirm that the price stayed the same; increased; or reduced; when the change was made from a 110mm height to 130mm height?

(The email was sent prior to purchasing Can C.)

Perhaps not surprisingly, I received no reply from Nestle. [Blogger’s note: I never received any reply from Nestle.]

Unfortunately, I never retained the receipts for Cans A and B, otherwise I could compare prices. But what’s the bet that the retail price probably increased?

And thus it came to pass…

“As short a time ago as February, the Ministry of Plenty had issued a promise (a “categorical pledge” were the official words) that there would be no reduction of the chocolate ration during 1984. Actually, as Winston was aware, the chocolate ration was to be reduced from thirty grams to twenty at the end of the present week. All that was needed was to substitute for the original promise a warning that it would probably be necessary to reduce the ration at some time in April.” – George Orwell,  ‘1984’



The Price of Chocolate (2015)


A recent story in the media caught my attention;


Cadbury blocks get the chop


The unattributed Fairfax article further stated,

Amanda Banfield, managing director of Australasia for Mondelez International, the parent company that owns Cadbury, said she expected a backlash.


She pointed to rising packaging costs and a lift in the price of raw materials.

The main ingredients are cocoa, sugar and milk.

So let’s have a look at the prices of raw ingredients.


This commodity dropped in price from NZ$0.22  per pound, in July 2014, to NZ$0.20 per pound, by January of this year, according to IndexMundi.com;


price of sugar - 7 months


Over the last year, the price of sugar increased, peaking in July last year, before falling back;


price of sugar - 12 months


But taken over a five year period, look at how the price of sugar has dropped dramatically;


price of sugar - 5 years


So the rationale for Cadbury’s decision to de facto increase their prices cannot be blamed on sugar, which is cheaper now than it was, five years ago.

Let’s have a look at cocoa (beans) – and a similar story unfolds;

Six months – a 3.95% increase;


price of cocoa beans - 6 months


Twelve months – a 12.26% increase;


price of cocoa beans - 12 months


However – over 5 years – a 21.06% drop in price;


price of cocoa beans - 5 years


It would be interesting to note if when the price of cocoa beans collapsed to NZ$2,601.96 per metric ton, in March 2013, did the price of a Cadbury’s bar of chocolate increase in size? Or fall in price?

As for the price of packaging, this would be based on a local commodity (paper and ink) and if  New Zealand’s low inflation is anything to go by (an average of 2.7% pa since 2000), would not be much of a factor in pricing. With the exception of four Quarters around late 2010 to mid-2011, inflation has remained at or below 2%, a fallout from the 2008 Global Financial Crisis and ongoing recessionary/low-growth influences;


trading economics - inflation 2010 - 2014 nz


So with commodity prices for sugar and cocoa beans lower now than five years ago, and with low inflation, what other cause  could there be for the de facto price price of Cadbury’s chocolate bars?

Perhaps the answer lies with Kraft’s acquisition of Cadburys  for  £11.5 billion (US$18.9 billion) in 2010. Kraft financed the take-over deal by  borrowing a massive  £7 billion (US$11.5 billion) to finance the deal.

However, the New Zealand branch of Cadbury’s did not return a profit to it’s parent company (Mondelez International) until three years later, when it paid a dividend of NZ$40 million to its parent company, Mondelez.

According to  statements, Cadbury NZ’s profit  tripled to $11.6 million, from $3.5 million a year earlier, even as costs fell by  2.3%.

So despite falling costs, and increased profits, Cadbury NZ was struggling to make dividend payments to it’s parent company, and meanwhile Kraft was committed to servicing a £7 billion (US$11.5 billion) loan which had financed the acquisition in 2010.

The reduction in Cadbury’s chocolate bars can therefore be attributed to Kraft’s indebtedness rather than the official company line of increased costs. Unless Cadbury is lying in it’s financial statements, their costs have actually fallen, not increased.

As with many corporate takeovers, the benefits do not necessarily accrue to the public. The number one beneficiary is almost always shareholders, and consumers come a poor second (or third, or fourth…).

In this case, reducing the size of Cadbury chocolate bars by 20% is equivalent to a price increase, and Kraft’s shareholders will reap the rewards of increased profits.

Not exactly a sweet deal for New Zealand consumers.


On 15 February, I contacted Statistics NZ, to enquire how SNZ views reduction in product sizes, whilst retail prices remain the same, in it’s calculation of the Consumer Price Index (CPI).

Dave Lum, from Statistics NZ replied;

The CPI measures price change in a “fixed” basket of goods and services, which means that we aim to measure price change based on quality being constant. In an instance where the quality (in your example, the weight/size) of an item changes, we show a price adjustment to account for the fact that the quality of the item has changed.

 As an example, if the size of a can of beans goes from 300g to 330g for the same price, this is shown as a price decrease for that item in the CPI. Likewise, if the can of beans went from 300g to 250g for the same price, it would be represented as a price increase.

So according to Mr Lum, Cadbury’s “switcheroo” with product sizes, will not materially distort CPI price measures.




Fairfax media:  Cadbury blocks get the chop

IndexMundi.com: Sugar Futures End of Day Settlement Price (6 months)

IndexMundi.com: Sugar Futures End of Day Settlement Price (12 months)

IndexMundi.com: Sugar Futures End of Day Settlement Price (5 years)

IndexMundi.com: Cocoa beans Monthly Price – New Zealand Dollar per Metric Ton (6 months)

IndexMundi.com: Cocoa beans Monthly Price – New Zealand Dollar per Metric Ton (12 months)

IndexMundi.com: Cocoa beans Monthly Price – New Zealand Dollar per Metric Ton (5 years)

Reserve Bank: Inflation 1990-2014

Trading Economics: Inflation 2010 – 2015

NBR: Kraft Foods (NZ) pays $40m dividend to parent Mondelez

Wikipedia: Acquisition by Kraft Foods





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  1. esoteric pineapples says:

    Chocolate and coffee are both expected to fall in supply thanks to global warming. People may not care about global warming yet, but they will when these become hugely expensive. According to this articles, also on the way our is seafood, corn and the animals that eat it, maple syrup, beans, cherries and wine grapes


  2. Murray Simmonds says:

    Absolutely fascinating article, Frank!

    Wherever possible, I try to avoid buying the products of Multinational Corporations (and Swiss-based Nestle is one of the largest on the planet). It is not always possible however, as often there is no local NZ or Australian based competitor that isn’t actually owned somewhere down the line by one of the multinationals anyway.

    For the same reason I avoid Starbucks and McDonalds and KFC and Wendys like the plague, and try to persuade the kids to do likewise, though again it isn’t easy. (Furthermore I don’t bank with any of the Aussie-owned banks for the same reasons.)

    I’m amazed that more people don’t seem to feel its important to keep NZ money within the borders of the country; to me its basic “Patriotism 101”!

    Some years ago there was a fascinating flow-diagram of which multinationals owned what; I wish I’d grabbed a copy while it was doing the rounds. From memory, there has hardly a company with a household name on the planet that wasn’t owned by one or the other of the Multinationals.

    I wonder: Does anyone out there knows if there is a kind of public register of NZ-owned and operated companies available on the internet?

    If so, I’d print out the list and put it in a gold frame and hang it on the dining room wall.

    • Draco T Bastard says:

      I’m amazed that more people don’t seem to feel its important to keep NZ money within the borders of the country; to me its basic “Patriotism 101″!

      To me that would be economics 101.

      You’d want NZ$ to stay in NZ. All NZ products to be only bought by NZ$. The exchange rate would be set by a fixed formula dependent upon the trade balance (If NZ exports little but imports lots then the exchange rate would go down making imports more expensive).

      Some years ago there was a fascinating flow-diagram of which multinationals owned what; I wish I’d grabbed a copy while it was doing the rounds.

      The Four Companies That Control the 147 Companies That Own Everything

      And those four companies are probably controlled by the same people. There’ll be some change in the minor shareholders but they won’t actually have a say in what the companies actually do.

      We don’t have competition, we have a hidden near monopoly which amounts to an outright plutocracy.

  3. Who Gnu says:

    Excellent analysis Frank!! This is the sort of stuff missing from our msm, who simply repeated Cadbury’s PR without any real background story!

  4. Gosman says:

    Was there a point behind this article beyond you hypothesising about price rises in cocoa and chocolate? Are you advocating that something be done about this?

    • Who Gnu says:

      Try reading the article properly, Goosie. Frank can’t be responsible for your lack of comprehension skills.

      • Gosman says:

        Perhaps you could paraphrase what he is advocating then as I can’t see what he wants to happen.

        • Gosman – perhaps you should read these blogposts more carefully. Gnu is right – I’m not responsible for your inability to comprehend.

        • OneTrack says:

          It’s obvious what he is saying. He is congratulating Cadbury for putting their own consumption taxes on their products containing sugar. Instead of just waiting for the Greens to get into government and introducing their regulatory sugar tax, Cadbury are being proactive in promoting good health outcomes for the people.

    • Nehemia Wall says:

      Hi Scarlet…IP number…I post from more than one location. This IP is my home. Username and email address…don’t change. If I have used different ones, it because of typo’s.

      Hi Nehemia. Username “Nehemiawall’s” IP (at February 24, 2015 at 9:16 pm) and email address differs significantly from those you use. Therefore I take it that someone else is attempting to appropriate your username – an action that raises my ire. This does not reflect on you and I certainly have no cause to associate you with the person doing this. – ScarletMod

      • Nehemia Wall says:

        In the meantime, park your high horse and Frank’s obsession with me being someone else and allow some dissent. Or are you really that threatened by contrary opinion? At least the Standard welcomes it.

        • Nehemia/IntrinsicValue, as Gosman said above;

          “Businesses are entitled to charge what they want for goods or services. You have the right not to purchase them. Why is this a difficult concept? “

          The same applies to you; If The Standard welcomes dissent (and by your implication, TDB does not), why don’t you go there instead?

          • Nehemia Wall says:

            Frank/kermit the frog or whatever else you want to call yourself…I wasn’t aware there was a charge for posting here?

      • Nehemia Wall says:

        All good, and apologies for my outburst below. I didn’t realise someone was trying to pass themselves off. In the meantime, I’ll continue to chuckle at Frank’s obsession with me being someone else.

  5. carlos ropehana says:

    Hmmm ive got to wonder: if their managing director is blatantly lying to media about the reason for the size reduction (which is really just a price increase), does this constitute as false advertising?
    Also, increasing the can size whilst reducing the contents (of the cocoa) is just downright misleading and is practically false advertising in itself in my opinion.

  6. tony says:

    I was born & brought up in Birmingham, my grandmother when she was young, and my Auntie May all her life, worked at Cadbury’s in Bournville. The Cadbury family included many who were seriously enlightened employers in those days, and the Bournville village was a much nicer place than most of the Victorian workers’ accommodation in the area.

    In New Zealand Cadbury used to to poll high as a trusted name. So it is sad to see that name so besmirched, and with such good reason. It is not long ago that the NZ firm announced a change in the recipe of Dairy Milk that resulted in widespread outrage and an apparent climbdown by the company.

    However it is possible that I am not the only customer who since then has avoided Cadbury products, a policy made easier by the existence of Whittakers, apparently a New Zealand family firm. If others have done the same, Cadbury NZ may well be suffering in market share, perhaps incurring greater advertising and marketing costs.

    So thanks for publicising this latest skullduggery, Frank, sometimes the informed market can be of use.

  7. David says:

    Well said Frank and a great piece of investigative reporting. But of course in the interests of supporting our own economy we should only be buying from manufacturers and companies who are 100% New Zealand owned.

    But also remember that foreign companies like Kraft and Nestles want to control the entire world food supply. They are also in league with Monsanto and if you are interested in public health, here is a must read article http://www.laprogressive.com/monsanto-autism/

    As our government does not care that we are being ripped off and disadvantaged by big corporations, we need more public awareness on these issues and people taking more responsibility for themselves although as Chris Trotter pointed out his recent article, we may need to go without some about favourite time wasting activities for a few days which would give us time to actually think.

    • Draco T Bastard says:

      As our government does not care that we are being ripped off and disadvantaged by big corporations,

      Of course they care – that’s why they keep writing laws that help the corporations rip us off.

  8. hemebond says:

    Likewise, if the can of beans went from 300g to 250g for the same price, it would be represented as a price increase.Dave Lum

    So according to Mr Lum, Cadbury’s “switcheroo” with product sizes, will not materially distort CPI price measures.Frank Macskasy

    What am I missing here because to me it seems like he is saying that it will be represented as a price increase.

    • Who Gnu says:

      If I understand Frank’s concluding comment, it’s that reducing the product size while retaining the original price will not undermine the CPI process, and will still be recorded as a price increase.

    • Matthew says:

      Yes, the CPI will change in line with the increased price of the chocolate, and so continue to be accurate. If the CPI didn’t change, that would be the distortion

  9. shelz says:

    Buy Whittakers – it tastes heaps better – last time I had Cadbury it was awful. About a year ago Vegemite jars downsized and price has just continued going up so I suppose Yeast extract price is going through the roof to justify price rises?? Also when are our milk prices going down to reflect the “global prices” we are paying? So many ways we are being screwed. Heard on the radio NZ pays some of the highest petrol prices in world. Thanks Frank, always enjoy your posts.

  10. Korakys says:

    Wow, this is an excellent piece of work Frank!

  11. Andy K says:

    I too, like many I know, have avoided Cadbury since a few years ago when they were revealed to be substituting vegetable oil, including palm oil, for cocoa butter and reducing the size.

    When the quality of chocolate is discussed, my father would often comment that Cadbury chocolate here was the best chocolate he tasted from around the world before he immigrated here, unlike today.

    Whittaker’s is a more ethical and quality product with a better range. Up until the 2000’s, there used to be a Cadbury cashew nut king size block on the market here I used to enjoy, don’t know why they ended that product line but suspected the quality of their products were on the decline since then.

  12. Sceptic says:

    Fortunately due to the capitalist system and private enterprise there are several other chocolate brands so if you don’t like Nestle or Cadbury you can buy something else.

    I wonder how much it would cost if it was a government owned monopoly.

    • Sceptic – you’ve missed the point.

      What is your view on a corporation seemingly raising the price of it’s product by blaming “rising raw materials”, when evidence shows this is clearly not the case? Do you have a view on corporate dis-honesty? If not, why not?

      And how can consumers judge what is the truth, when it is buried amidst press releases that the MSM fail to challenge? In effect, “you can buy something else” isn’t an answer when the business environment is based on deception.

      Or do you believe that consumers are not entitled to know the truth? If that is the case, then how can consumers make informed choices “to buy something else”?

      • Gosman says:

        Businesses are entitled to charge what they want for goods or services. You have the right not to purchase them. Why is this a difficult concept?

        • So, you do understand what my story was about after all?

          Now that you’ve admitted as such by responding a little more intelligently, I can put it to you that “businesses are entitled to charge what they want for goods or services. You have the right not to purchase them” is somewhat difficult when said businesses wilfully mis-represent what they are doing.

          Besides which, as Consumers, we certainly have the right to Buy or Not to Buy, for that is the only Question.

          But as Citizens, we also have the right to ask questions, as awkward as they might be to businesses. We don’t need business cheerleaders like you, Gosman, telling us Citizens/Consumers what we can or cannot question.

          I trust that answers your rather simplistic, black and white view of things?

          • Gosman says:

            If you believe they are engaging in uncompetitive or unethical behavior report them to the Commerce commission. I suspect you won’t get much luck from them as what you have described is not illegal nor particularly harmful. Have you heard of the term Caveat emptor before? It applies to cases like this.

            • So I repeat; do you not believe that citizens/consumers are entitled to ask awkward questions of businesses and their activities?

              Do you not believe that citizens/consumers can only make informed decisions if they have accurate information?

              Fairly simply questions, Gosman and your deflecting only indicates you have no answers to some very straight-forward questions.

              • Nehemia Wall says:

                To interject…I certainly believe we should be asking questions of businesses. In the case of chocolate, which I love btw, there is plenty of competition, including some local varieties, so we can vote with our feet. That’s the advantage of capitalism. The thing I find strange about your post is that it seems almost obsessive. You have gone to a great deal of effort to prove nothing, because the elephant in the room is that you don’t have prices for the various products to compare. Something you have admitted yourself.

                • Nehemia/IntrinsicValue – you are being disingenuous by referring to the price of the product, and not the actual cause of the price rise. You admit that we should be asking questions – and then change the subject entirely, trying to move away from the questions I’ve posed.

                  You’ve made several postings to this story – and you’ve not addressed a single point I’ve raised, nor provided any counter-factuals. In fact, you’ve studiously avoided challenging any of the facts I’ve published.

                  Instead, you seem to be engaged in rather puerile attempts at smart-aleckery and spouting mindless neo-liberal cliches.

                  It will take more than another user-name change to over-come the reputation you’ve built for yourself as an apologist for business and neo-liberalism.

              • Gosman says:

                You are entitled to ask anything you like. You are not entitled for them to be answered.

                From what I can tell your whole post is highlighting a company attempting to maximize profit via sneaky (but not illegal) means. This may well be a problem if we lived in a society where there was no alternatives. However in this case, as many people here have pointed out, there are alternatives.

                In short Frank you might not like what they do but then you don’t have to be impacted by their behaviour. Think of it like the economic equivalent of a Gay rights parade.

                • Your support for business at the expense of citizens/consumers is duly noted.

                  Remember that next time you have a query or complaint you want to make against a business, Gosman.

                  • Gosman says:

                    I’m not supporting anybody over anyone. I’m pointing out there is an obvious solution to your issue with Cadbury i.e. buy from another company.

                    • You still fail to address the points I have raised. If companies are being dishonest, and people like you and Nehemia/Intrinsicvalue decry publicised criticism of their dodgy behaviour – then how are we, the public, supposed to know who is acting responsibly and who is not?

                      It’s a fucking simple question, Gosman. Try answering it instead of seeking refuge in your naive, pro-business dogma.

  13. countryboy says:

    Brilliant analysis @ Frank . Less for more and have ones brain bent by the bigger tin into thinking that in fact one’s getting more for less . Ha !

    Like Auckland house prices ?

    A logical fallacy .

  14. Pasupial says:

    Good post, though a better title would have been:

    Chocolate and the price of capitalism.

  15. Draco T Bastard says:

    As with many corporate takeovers, the benefits do not necessarily accrue to the public. The number one beneficiary is almost always shareholders, and consumers come a poor second (or third, or fourth…).

    Actually, the number one beneficiary is always the rich with the number two being the banks. As that video shows, it’s always the poor and middle classes that pay for the rich to be rich.

  16. […] blogpost was first published on The Daily Blog on 24 February […]

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