Life is like a box of chocolates – full of nuts! 😛 They’re also similar in that we never know what we’re going to get. Life gave me a tax refund this year so I decided to put the money to good use and invest it in chocolate. I believe the cocoa industry will continue to grow and I don’t want to miss out on all the potential gains. 🙂
Produced from the tropical cacao tree people have been cultivating cocoa for at least 3,000 years. It’s one of the oldest, sustainable food we know of. Dating back to circa 1,100 BC the Aztecs were the first to use it by making cocoa into a beverage. Over time cocoa products have become an important part of the world’s social fabric. 😉
The Global Cocoa Market 🍫
Generations of confectionery marketing experts worked hard to integrate chocolate into as many parts of our lives as possible. We eat chocolate at weddings, birthdays, anniversaries, and many other events. It’s also customary to buy chocolate on Valentines, Christmas, Easter, Halloween, and other holidays. It can be a part of breakfast, lunch, dinner, snacks, appetizers, and desserts. Globally about $100 billion worth of chocolate is eaten every year. It has even made it into the hospitality industry, especially in fancy hotels and restaurants where guests are offered complimentary chocolate.
About 60% of the world’s cocoa is produced in West Africa. The 7 countries listed in the picture below is responsible for 90% of the world’s chocolate supply.
But chocolate is sold the most in Western Europe. According to Euromonitor, the United Kingdom had the highest chocolate consumption per person than any other country. On average, every U.K. citizen consumed about 11 kg(24 lbs) of chocolate in 2011. The United States consumes about 4.5kg (10 lbs) per person.
Health and Social Benefits
Chocolate is a product of the cocoa bean. A bean is a vegetable. Therefore chocolate is a salad. So you never have to feel guilty about eating chocolate anymore. You’re welcome. 😉 Chocolate isn’t just a delight for the taste buds. It can also be good for you. 🙂 Moderate consumption of dark chocolate is believed to lower cholesterol. If you’re feeling sad eating chocolate can cheer you up because it releases endorphins into the brain. Endorphins are known to decrease levels of both stress and pain. When no one understands you, chocolate is there. 🙂 Other neurotransmitters in the brain released by chocolate include Phenylethylamine (AKA the love drug ❤️) and serotonin, a mood-lifter ☺️. Look at that! Chocolate is cheaper than therapy and you don’t even need an appointment, lol.
Cocoa bean production is essential for the economic stability of small family farms in poor countries. Chocolate is customary in many social events and activities and bring people closer together. It even helps couples get through those tough times.
Since cocoa is such an important part of our lives today maybe we should think about including it in our retirement plans eh. 😀
Why Invest in Chocolate?
- The supply is restricted. There are only certain parts of the world where cocoa beans can be grown.
- Demand is growing. Industry forecasts the world cocoa demand to grow 30% by the year 2020. Cocoa butter can also be used in a variety of pharmaceutical and cosmetic products.
- Chocolate is addictive. Chocolate has been found to trigger parts of the brain that are associated with drug addiction. Many food scientists have reported chocolate to be the single most craved food. Seven days without chocolate makes one weak. 😛 But there is no organization called Chocoholics Anonymous because no one wants to quit.
How to Invest in Chocolate 💰
There are several ways to make money from chocolate.
- Become a chocolatier
- Buy/Sell cocoa futures
- Buy cocoa ETFs/ETNs
- Buy chocolate companies
I prefer the last method in the list and have recently purchased some shares of The Hershey Company as well as Mondelēz International. Both are chocolate manufacturers on the Fortune 500 list and are making terrific profits. 🙂 Later this week I will blog about these two confectionery giants and explain why I invested in them.
A couple of years ago I blogged about why it was a good idea to invest in coffee. Looks like that was a good call since my Starbucks investment has returned 100% since 2013. Cocoa beans have many of the same properties as coffee beans. They’re addictive, can’t be replaced or substituted, ingrained in our society, and a small group of countries control the vast production.
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Random Useless Fact:
You aren’t wealthy until you have something money can’t buy.
Hershey has been on my list for several years. I have been writing puts against my desired price, and collected premiums, but not the stock yet… I hope my wait will be over soon 😉
Earning option income off the stock is just as good of a strategy. Once you eventually own some shares you can even consider doing covered calls.
I never sell covered calls. I prefer puts – the downside is limited, and I tend to do it for overvalued companies that sell for a richer valuation. With covered calls, I cap my upside – why would I do this 😉
Chocolate is good… My play in that arena is RMCF I’ve owned it for a few years now… The growth play so far isn’t capitalizing.. but I for 1 enjoy their product and it pays a dividend… so I’m sticking with it.. Interested in see how you did your ratings and analysis for your Chocolate investing…
Rocky Mountain appears to be a good choice. It’s cheaper to buy than Hershey and has a better looking p/e multiple. Good luck with it. :0)
If you are inclined to do the homework and research on Hershey’s, you will know that it is a steady, consistent, money minting machine.
Sounds like we can just sit back and enjoy our sweet time with this one. :0)
Liquid,
Hard to avoid chocolate sometimes. I contribute to their bottom line a lot, and now to your bottom line also in the form of rising dividends over time .
Chocolate is a guilty pleasure for many people. Some say the price of cocoa will go higher in the next 10 years, but I’m pretty confident chocolate manufacturers can just pass on the increasing costs to consumers if that happens.
Don’t forget the most important factor of chocolate profits — the chocolate companies work together to fix market prices (aka the illegal practice of racketeering). Yum yum! 😎
Haha, I won’t complain if they do.
Inline with the prevailing world view: Money > Law.
[…] cocoa should put their money behind bars. Chocolate bars that is! Earlier this week in part 1 of my investing in chocolate series I wrote about the insatiable global appetite for chocolate and how to make money from that. Today […]