Cocoa, the beloved ingredient that graces our taste buds in the form of chocolate, has become quite the hot topic. In 2024, it holds the title of best-selling commodity worldwide. However, its journey to this prestigious position has been anything but smooth.
Futures prices for cocoa have skyrocketed, doubling in less than three months. The culprit? Poor harvests in West Africa, where the majority of the world's cocoa is cultivated. As a result, chocolatiers have been grappling with the challenge of rising commodity costs. Yet, they have a unique advantage: the absence of great substitutes. When cocoa prices surge, they can pass on the cost to consumers without much resistance.
Now, let's shift gears to a different realm: the electric vehicle (EV) market. Unlike chocolatiers, makers of electric vehicles are not so fortunate. EVs face a different kind of demand elasticity. Here's why:
1. Affordability Barrier: EVs lack affordability, which hinders their widespread adoption. While consumer interest in EVs remains high, the price tag often proves prohibitive for many potential buyers¹.
2. Brand Renaissance: On the brighter side, early data suggests that EVs are sparking a brand renaissance for automakers. These electric vehicles provide an opportunity to redefine their brands in the eyes of consumers, a feat that would typically require substantial investment over years or even decades³.
In summary, while chocolatiers can navigate the cocoa price surge, EV manufacturers grapple with affordability challenges.
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