This Is How The Chocolate Market Actually Works

Joe Weisenthal (0:08)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:14)

And I'm Tracy Alloway.

Joe Weisenthal (0:16)

You know, Tracy, there's some commodities out there that I feel like when people talk about them, they don't always take them very seriously as commodities, as serious markets.

Tracy Alloway (0:32)

I'm trying to think now, live hogs, maybe?

Joe Weisenthal (0:36)

Well, that's probably one.

Another one I would say is the marijuana industry still, you know? But no, we're gonna be talking about another commodity about which I feel like people often like to make jokes or maybe don't realize is very serious business. And that is cocoa.

Tracy Alloway (0:54)

Cocoa. I love chocolate.

Joe Weisenthal (0:57)

Yeah, exactly. See, you're proving my point, which is that as soon as the conversation turns to cocoa or chocolate, usually people start getting into some sort of aesthetic discussion about how much they love it.

And which you never hear of say, we're talking about copper or palladium.

Tracy Alloway (1:18)

People don't start talking about their favorite shades of metals when they're talking about precious metals. That's very true. Whereas I feel a very, very strong urge right now to talk about my favorite brands of chocolate, but I will resist.

Joe Weisenthal (1:30)

Well, it's not that it's irrelevant perhaps to our conversation, but it is good to remind people that there is a serious traded commodity market that underlies the chocolate that they love and has some very interesting market dynamics in terms of who supplies it, who grows it, who buys it, that makes it perhaps more interesting story than just something very sweet and tasty to eat.

Tracy Alloway (1:57)

Well, I'm intrigued. I think we should talk about the serious side of chocolate and I will try very, very hard not to make any jokes.

Joe Weisenthal (2:05)

Okay, well, today we are going to be talking to Kristy Leslie. She is a professor at the University of Washington Bothell and she is also the author of a book all about the cocoa market called Coco. I've spoken to her on TV, on my TV show, What'd You Miss that I co-host about the incredible rally that we've seen this year in the price of cocoa. And I was so fascinated by the dynamics of the cocoa market that I wanted to learn more and really dive into how this commodity market really works.

Tracy Alloway (2:41)

Thank you.

Joe Weisenthal (2:47)

Kristy, thank you very much for joining us.

Kristy Leissle (2:50)

Yeah, no, thanks for having me. It's great to talk again, and I really appreciate very much your comments about taking cocoa seriously. When I did my PhD by studying cocoa and chocolate, it was actually pretty difficult to be taken seriously as a scholar, at least in the beginning, because people immediately wanted, just as you say, to start talking about their favorite chocolate.

Joe Weisenthal (3:16)

No, I imagine if you had written, say, a book about how the soybean market or the corn market worked, no one would really question that it was serious scholarship and serious business. But of course, I guess if you write about chocolate, immediately people think maybe it's a bit more of a frivolity or something that is not that serious.

Kristy Leissle (3:40)

I really think so. And I think it's because people don't usually have the same kind of emotional relationship with soybeans or corn as they do with chocolate.

And so it's much easier for people, I think, to make the transition to thinking about those things as serious traded goods. But we have such a strong, we're passionate, we're collectively passionate about chocolate. So the first thing people think of is their own personal experience rather than maybe the larger economic context.

Joe Weisenthal (4:16)

Kristy, I just realized something which I should have said in the beginning. Where are we talking to you? Where are you based right now?

Kristy Leissle (4:24)

So I am in Accra, which is the capital of Ghana and in West Africa. And Ghana is the second largest cocoa producing country in the world. The first largest is Ivory Coast, which is right next door.

And there's no cocoa in Accra itself. It's a very urban environment, so we don't see that many cocoa trees around. But not too far outside, there's quite a bit of cocoa.

Joe Weisenthal (4:49)

So I mentioned in the beginning that there were some interesting aspects with where cocoa is grown. You mentioned Ghana, you mentioned Ivory Coast. What does the global distribution overall look like? How significant are these particular markets? What are some of the other big ones?