Hazelnut crop in Turkey, a significant contributor to Nutella production, faces a setback due to frost, potentially leading to increased costs for Nutella enthusiasts worldwide.
The 2021 Turkish hazelnut crop shortage has brought about significant changes in the global market, particularly affecting companies like Ferrero SpA and its popular product, Nutella.
Turkey, which produces around 65% of the world's hazelnuts, is the dominant supplier. A substantial crop shortage in the country has a ripple effect on global hazelnut availability and pricing.
The shortage is due to a series of damaging cold snaps, including a severe frost event in April 2021, which reduced hazelnut yields significantly. This has led to a 30% rise in wholesale hazelnut prices since the event, with prices expected to continue rising due to ongoing supply constraints.
Ferrero, the Italian company that produces Nutella, buys around a quarter of Turkey's hazelnut output. The disrupted supply and higher prices have increased the cost of Nutella production, leading to global price rises for consumers, particularly in markets such as the U.S. where Nutella is highly popular. The shortage also threatens other Ferrero hazelnut products like Ferrero Rocher chocolates.
However, Ferrero has indicated that while weather-related disruptions in Turkey impact hazelnut production, it does not foresee a total supply disruption because it also sources hazelnuts from countries like Italy, Chile, and the U.S.
The shortage exacerbates existing volatility in hazelnut production and pricing, which is also influenced by factors such as pest invasions and weather variability in other producing countries. These issues pose ongoing challenges for price predictability and supply chain stability.
The shortage could also pose a political problem for President Recep Tayyip Erdogan, as the affected families are concentrated in his stronghold regions. The price of hazelnuts is expected to continue rising, according to agricultural intelligence firm Expana, potentially benefiting investors like Finnish asset manager Evli, which has added Turkish hazelnut processing company Balsu Gida Sanayi ve Ticaret AS to its Emerging Frontier fund.
In conclusion, the 2021 Turkish hazelnut crop shortage has tightened global hazelnut supply, causing price increases that directly impact companies like Ferrero. This leads to higher market prices for hazelnut products, including Nutella, while companies attempt to diversify sources to mitigate risk. The shortage is expected to persist until the next year's harvest in August 2026, with no significant alternative supply at scale available until then.
- The rise in wholesale hazelnut prices, due to the shortage in Turkey, could potentially influence the cost of other health-and-wellness products that rely on hazelnuts, like healthy-diets and environmental-science focused food-and-drink products.
- The ongoing climate-change influenced weather disruptions, such as the April 2021 frost event in Turkey, could have long-term effects on the science and lifestyle of health-and-wellness, as the consumption patterns of food-and-drink can be significantly impacted by price rises.
- Amidst climate-change concerns and pest invasions challenging hazelnut production in different regions, an increased focus on nutrition and sustainable farming practices might be essential for dealing with food-and-drink supply chain instability.
- The volatility in the hazelnut market, as observed through the 2021 Turkish crop shortage, could have far-reaching implications beyond food-and-drink—politically, economically, and environmentally. The effects could be felt by governments, companies, investors, and even consumers devoted to health-and-wellness and environmental-science.
