The Great Cocoa Power Shift: Compositional Forecasting of Market Share Dynamics and Supply Chain Concentration Risks

Abstract

This study examines the structural transformation and increasing geographical concentration in global cocoa production, with a specific focus on forecasting market share dynamics among the top ten producing countries from 1961 to 2035. Datasheet based on FAOSTAT were used in this study. The analysis identifies three dominant trends from recent decades: the accelerating dominance of Côte d’Ivoire, a regional rebalancing marked by rising production in the Americas and relative declines in Asia, and the emergence of strong new players such as Ecuador and Peru. These shifts concentrate systemic risk within the global supply chain, heightening vulnerability to localized shocks. To address the unique challenge of forecasting constrained compositional data, where all market shares must sum to 100%, this research develops and compares two advanced methodological frameworks: a Compositional Share Forecasting (CSF) approach using Vector Autoregression on Isometric Log-Ratio transformed data, and an Integrated Production Forecasting (IPF) framework based on a multivariate structural time series model. The results project a critical transition of the global cocoa market from a “moderately concentrated” to a “highly concentrated” structure, with the HerfindahlHirschman
Index (HHI) forecast to breach the 2,500 threshold. An early warning system is established, indicating a Red Alert will be triggered as Côte d’Ivoire’s share is projected to exceed 50% by 2032. Model validation shows the IPF approach provides superior forecast accuracy for absolute production volumes, yet both methodologies concur on the intensifying concentration trend. The study concludes that proactive, evidence-based policy interventions—focusing on strategic sourcing diversification, investment in climate-resilient production in emerging regions, and enhanced supply chain transparency—are urgently required to mitigate systemic
risks and foster a more resilient and sustainable global cocoa market.