One of Britain's most beloved confectionery brands, Tunnock's, has reported a dramatic slump in profits despite achieving record sales, as the global cocoa crisis takes its toll on the Scottish manufacturer.
The Bitter Taste of Soaring Costs
Latest accounts reveal that pre-tax profits at Tunnock's have plummeted from £4 million to just £841,000 over the past year. This startling 79% decline occurred even as the company celebrated record sales of £87.7 million, demonstrating strong ongoing demand for its iconic Teacakes, Snowballs and Caramel Wafers both domestically and across more than 30 export markets.
The profit collapse stems directly from what Sir Boyd Tunnock describes as "the more recent cocoa crisis." Writing in the company accounts, the 92-year-old chairman noted that the gross profit percentage decreased to 22.4%, remaining below pre-2023 levels due to "significant increases in raw material costs."
Climate Change Hits Chocolate Production
The root cause lies in West Africa, which produces the bulk of the world's cocoa beans. Poor harvests driven by climate change have made production increasingly unstable, causing cocoa bean prices to more than quadruple.
Sir Boyd specifically highlighted that these "raw material cost increases are very challenging and continued to impact the company's financial performance after the year end." The situation has been further complicated by economic repercussions following the invasion of Ukraine.
Investing in Tradition Amid Economic Pressure
Despite these financial headwinds, the family-run business continues to invest in its future. During this challenging period, Tunnock's invested over £2.2 million in new machinery to expand capacity and maintain their market-leading position.
In a refreshing stance against modern retail trends, the company has vowed not to reduce product sizes - a practice known as shrinkflation that has become common among competitors. Sales director Fergus Loudon emphasised this commitment, stating: "If your mother or your grandmother bought Tunnock's Caramel Wafers 50 years ago, they were the same size then that they are today."
Founded in 1890 by Thomas Tunnock in Uddingston, Lanarkshire, the business remains a Scottish institution employing more than 600 people. Sir Boyd Tunnock, who invented the famous Teacake in 1956, was knighted in 2019 for services to business and charity. The brand's cultural significance was highlighted during the 2014 Commonwealth Games in Glasgow, where dancers dressed as Teacakes delivered a memorable performance celebrating Scottish identity.
