Belgian Economic Landscape Explores Tax Issues and Chocolate Pricing
Belgium is currently facing significant economic challenges, as seen through the dual lenses of skyrocketing cocoa prices affecting the chocolate industry and alarming undeclared taxes from multinational corporations. The Belgian chocolate sector, known for its world-class quality, is grappling with rising prices of cocoa beans, whilst simultaneously, the country is also seeing unprecedented tax discrepancies as corporations fail to accurately report their profits.
According to Philippe de Selliers, CEO of Leonidas and head of the Belgian Chocolate Association (Choprabisco), cocoa prices have soared to new heights. Since January 2024, international market prices for cocoa have surpassed €10,000 per tonne—more than double what they were the previous year. Notably, this price increase has not been due solely to seasonal fluctuations; structural issues within the sector play a significant role. "The cocoa farmers are not earning enough, they don't have enough money to reinvest in their farm... They are harvesting less cocoa – so there is less on the market," de Selliers explained, highlighting the plight of farmers who face financial instability.
De Selliers emphasized the detrimental psychological effects this pricing has on consumers. He stated, "It becomes a psychological disaster... consumers will think chocolate is like caviar, and that's really not the case. Chocolate remains a real pleasure for a truly affordable price." His insight points to the danger of misinterpretation arising from media focusing on high cocoa prices, which can skew public perceptions of chocolate as being exclusive or overly expensive.
While chocolate remains within reach for most Belgians, famous chocolatiers like Neuhaus report needing to adjust prices occasionally to balance sustainability with consumer satisfaction. A representative from Neuhaus mentioned, "Price adjustments sometimes are necessary to maintain the delicate balance between sustaining business operations and upholding consumer satisfaction." Interestingly, even with rising prices, the brand has not detected any significant decline in consumer demand, indicating strong public support for high-quality, sustainable chocolate.
Unfortunately, the tax reporting issues from multinational companies compound these economic stresses. A recent report revealed Belgium’s tax authorities are pursuing €1.17 billion worth of undeclared taxes, the most significant sum ever recorded within the nation. This figure is four times higher than the €262 million total from 2023. Of this amount, €981 million came from what officials termed "exceptional cases," attributed to discrepancies during the assessment years of 2022 and 2023 and stemming from just a small number of large corporations.
Jeroen Jacobs, administrator at the Finance Ministry, explained, "When there is a dispute, 80% of court rulings are in favour of the tax authorities." This statistic outlines the uphill battle multinational corporations may face if they attempt to contest the tax authority's decisions, underscoring the seriousness of their reporting obligations.
How Belgian chocolatiers manage rising cocoa prices amid market volatility is of utmost concern. De Selliers indicated Leonidas has had to raise prices over the past two years, but he ensures price adjustments remain minimal, stating, "We have lost margin per kilo sold, but we have sold more kilos." His philosophy of not overreacting to market changes has allowed the brand to maintain consumer loyalty.
Meanwhile, as companies explore new methods to cope with economic obstacles, innovations within the chocolate industry could play a pivotal role moving forward. Meike Callebaut, Choprabisco's external advisor, noted the potential for product innovation to become more common, especially with how cocoa is utilized. For example, cocoa pulp is increasingly being utilized for fillings, maximizing the value of the entire cocoa fruit rather than discarding parts of it.
Despite the systemic challenges surrounding both cocoa prices and multinational tax reporting, de Selliers remains optimistic about the future of Belgian chocolate. "I am really not afraid," he assured. "I haven’t heard anyone in Belgium saying we are playing with quality." This commitment to quality, sustainability, and innovation implies the Belgian chocolate industry will weather current storms uniquely and resiliently.