Flash in the Pan

This is hardly the news you want to hear going into any prime period for entertaining and cooking. As the New York Times reports, both Canadian and US authorities are investigating pricing practices among large chocolate companies. The Canadian investigation started last month, including the Canadian divisions of Hershey, Cadbury Schweppes, Mars, and Nestle. Now those south of the border are starting investigations. Both Mars and Nestle have admitted being contacted by the US Department of Justice; Hershey declined to comment, as did the DOJ. If true, this could be a serious situation:<

American consumers buy about $13 billion worth of chocolate a year, said Susan S. Smith, spokeswoman for the National Confectioners Association.

The Wall Street Journal's report suggests that chocolate makers might have been trying to offset higher dairy prices. (Sorry, but I think the link needs a subscription.):

On a conference call with analysts on Oct. 10, Cadbury CEO Todd Stitzer said the company expected ingredients to cost 5% to 6% more in 2008 because of rising commodity prices, particularly for milk. "We are in the process of implementing price increases in most of our markets to offset these increases," he said.

The Journal also underscores the potential seriousness of any charge:

It isn't clear precisely what the Justice Department is looking into or whether the preliminary inquiry will become a formal criminal investigation. Price fixing can be a serious offense, leading to heavy fines and, in some cases, jail terms for executives. While antitrust enforcement has eased generally in recent years, the Bush administration has aggressively prosecuted price fixing in many industries and global markets, from airline cargo to semiconductors.

In other chocolate news, Campbell is selling Godiva Chocolatier to Yildiz Holding of Turkey for $850 million. Not that I have any fodness for Godiva - given the prices they charge, I think their chocolates are at best second rate. But it does leave me wondering whether Campbell is just disappointed that no one stormed their doors, demanding a chocolate soup. I was surprised to learn that Campbell had owned the chocolate company since the late 1960s.

Labels: business, chocolate