Demand and Supply: Chocolate Stories
Because the price of cocoa is soaring, we might soon be paying more for cookies. But first, a bit of history.
A Chocolate Butter Drop Do Cookie crisis in 1930 is the reason we have chocolate chip cookies today.
One evening, Ruth Grant Wakefield, the proprietor of the Toll House Inn, was about to bake her Drop Do’s using, as always, Baker’s chocolate. Discovering she had none, she reached for a block of Nestlé semi-sweet, chopped it up, and mixed it in the batter. To her surprise, instead of melting, the chocolate in the baked cookies became “moist and gooey.” Her guests loved the new snack and the rest is history!
Ms. Wakefield shared her chocolate crunch cookie recipe with several newspapers, described how to bake them on the radio show, Betty Crocker Cooking School of the Air, and included them in her 1936 cookbook.
With more people baking chocolate crunch cookies, Nestlé’s semi-sweet chocolate sales were soaring. For a lifetime supply of chocolate, they purchased the rights to the recipe from Mrs. Wakefield, invented the chocolate morsel, bagged it, and printed (what was now called) the Toll House cookie recipe on the package.
Today, Nabisco’s Chips Ahoy are the second most popular cookie. #1? Oreo.
And that takes us to chocolate.
Chocolate prices are soaring. On the supply side, there has been a shortage of cocoa beans that is expected to continue because of dry weather in West Africa. Meanwhile, chocolate demand has been rising. An affordable luxury, not only in the US but also in developing nations like Brazil, more people are buying chocolate. In addition, dark chocolate has been in the news as a “health food” that might increase the flow of blood to the brain and provide antioxidants, fiber and magnesium.
As economists, thinking of chocolate cookie popularity, the growing appeal of dark chocolate, and ascending affluence in emerging markets in Asia and South America, we can shift the demand curve to the right. With the supply curve also moving, but to the left, the result is a price spike.
Sources and resources: You can read extra facts about chocolate chip cookies at businessinsider and facts about the price of cocoa at Reuters. Hat tip to WSJ for alerting me to chocolate’s popularity increase.