Cocoa Beware

“Chocolate is nature’s way of making up for Mondays.” – anonymous

“All you need is love. But a little chocolate now and then doesn’t hurt.” – Charles M. Schultz, Peanuts creator

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Over the past few months, I’ve seen alarming headlines warning about a looming shortage or a looming price hike of some of my favourite food items: bacon, wild-caught fish… even Velveeta cheese (don’t judge me, it’s an occasional guilty pleasure!). But none of these bits of news struck me quite the way the cocoa headlines have hit me.

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Apparently, cocoa supplies are headed for the longest production shortfall in more than five decades. There are two things going on here: demand is soaring while supply is down because of a shortage of precious cocoa beans in West Africa, which supplies most (70%) of the world with this brown gold.

So why are more people suddenly clamouring for more chocolate? You can thank scientific study after study that suggests chocolate, especially the higher quality dark variety, has a slew of health benefits from protecting your heart to fighting stress. But according to experts, the bulk of the “new” chocolate consumers are in Asia and other emerging parts of the world, and this phenomenon has nothing to do with chocolate’s purported health benefits.

Not only is Asia home to an increasingly larger number of people classified as “middle class,” it seems that, like their counterparts in the West, once you try a bit of chocolate, you’re hooked. You can never go back to a life without (or with very little) chocolate.Image

Consider this: the world’s leaders when it comes to chocolate consumption are the Swiss where the average person eats more than 22 lbs of chocolate a year. Canadians consumer about 12 lbs annually and in the U.S. that number is 11 lbs. But that’s still a lot when you figure that the average person in China eats about a fifth of a pound in a year (I think I’ve eaten that much over the past holidays alone!).

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The opportunity to grow the chocolate market in the Asia-Pacific is huge. Big companies like Hershey know it and they’re setting up shop in the region, betting that they can cash in on all those chocoholics present and future.

All of these things factor into the ever-rising price of cocoa supplies. That includes cocoa butter, that delicious stuff that gives chocolate its unique melt-in-your-mouth quality. According to the International Cocoa Organization, cocoa makes up about 10% of the average price of a chocolate bar. Cocoa shortages are expected to hit late this year and, if current trends persist, we could see prices marching ever higher and global shortages until 2018.

I’m not writing this to alarm you. My hope is that you see this and, rather than rushing out to increase your chocolate intake, make a concerted effort to really enjoy the 12 lbs or so that you’ll be eating this year. I’ll be asking for chocolate in lieu of flowers this Valentine’s Day…

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Lego Mania

“To contemplate LEGO. Many colours. Many shapes. Many inventive and useful shapes. Plastic. A versatile and practical substance. Symbolic of the resourcefulness of man.” – Jay Woodman, author & poet

Over the holidays, I had the chance to watch the trailer for the upcoming LEGO movie. I was intrigued. It looked like good fun for kids and adults alike.

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It also got me thinking about this product that I loved dearly as a child. I could spend hours playing with LEGO. It’s the kind of toy that forces you to use your imagination every time you use it.

LEGO is a privately-held Danish toymaker that has managed to reinvent itself over the decades. Thanks to good quality control, an aggressive patent and litigation strategy to ward off copycats plus clever marketing, this company’s future is bright. Check out this chart, it shows how LEGO’s revenue growth leaves the global toy market in the dust.

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Please note that the “global toy market” category includes things like video games! Amazing.

LEGO has seen its share of misses, like its attempt to bring its characters to life on the small screen with a TV show in the ’90’s.  That was short-lived because LEGO execs weren’t impressed with the program. But its merchandising partnerships have been hit-makers, helping the company churn out and sell product lines for Harry Potter, Star Wars and Pirates of the Caribbean.

Part of LEGO’s success stems from its ability to appeal to several demographics at the same time: the nostalgic grandparent, parent and child. Three generations of LEGO fans… you do the math!

Like the LEGO movie, which looks like it has enough slapstick to keep kids entertained while providing just enough grown-up humour to keep the, ahem, bigger kids’ attention, this is a company with products for all age groups. Take for example the $500 Death Star kit, which is clearly aimed at adults. Or, if the leaked images are to be believed, the upcoming Simpsons set, featuring a rumoured 2,500 pieces of Springfield inspired LEGO.

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Word on the street (or online) is that this set will retail for more than $300… That’s a hefty grown-up price tag!

For a company like LEGO, that boasts as much brand recognition as Disney, it’s too bad it isn’t publicly traded. I can think of a few investors who’d like to get a “piece” of LEGO action.