I think Nutella is, maybe, the second most important invention ever, right after the wheel. I mean, I’m a big fan of hazelnuts, no shame in that.
But a few months ago, I noticed something off. The price of natural hazelnuts nearly doubled, and then they became pretty hard to find in the usual supermarkets.
This piqued my interest. So, I started wondering if there was something strange going on in the hazelnut market.
Hazelnuts: A Market Shock
Hazelnuts are quite unique as a product—they have a tightly-knit supply chain. About 70% of the global production comes from Turkey, mostly from the Black Sea region, which is ideal for hazelnut trees due to its favorable soil and climate. Not many agricultural products rely so heavily on such specific conditions.
This concentration extends to labor, too. Around 600,000 farmers cultivate hazelnuts in Turkey, predominantly on small family-owned plots. If you consider processing and logistics, about 5 million people are tied to the hazelnut industry. It’s a fragmented and labor-intensive process, which can certainly impact market dynamics during tough times.
An Opaque Market
You won’t find hazelnuts being traded on major agricultural exchanges. There aren’t any futures contracts or benchmark prices available. Most transactions happen informally—often over the phone—between farmers and wholesalers.
This just makes the market somewhat elusive for outsiders, and traditional commodity markets don’t really provide visibility. Still, the actual supply and demand are clear, and disruptions can lead to drastic price changes.
Severe Supply Shocks
A warm spring had caused the trees to bloom early, so when the temperature dropped suddenly, the damage was swift. Initial estimates indicated that around a third of the hazelnut crop was lost in just a few days.
But the frost wasn’t the only issue. Producers were already under pressure from pests like the brown stink bug, which can wipe out up to 20% of the yield in a bad season. On top of that, the summer of 2024 was the hottest and driest in over 60 years, stressing the trees further for the subsequent season.
By the time the frost occurred, there was very little room for error, and the effects have been felt in the market ever since.
Put it all together, and you see a significant imbalance—supply for 2025 might only meet about half of the global demand.
Price Trends Without a Benchmark
This pattern is illustrated by a stylized price index, with spikes driven by actual supply issues rather than market speculation. Adjustments afterward are more about rationing demand than recovering supply.
Structural Issues in Supply
Even if hazelnut prices rise, there isn’t an immediate increase in supply. This market isn’t flexible. Hazelnut trees take time to mature, and planting new orchards isn’t an overnight task. There aren’t many countries where they can be grown. The majority still comes from small family farms, which often lack the capital to boost production, even when prices are favorable.
This rigid structure means that when shocks happen, they hit hard. Instead of gradual adjustments, prices jump, sales drop, and buyers have to scramble for solutions.
A Market to Watch
This ongoing demand, combined with concentrated production and increasing environmental and biological risks, creates a fragile market. If something goes wrong, reactions can be abrupt rather than smooth.
Hazelnuts provide insights for the future. They show how physical goods respond when there are no inventory buffers, no financial markets to cushion the impact, and slow supply responses. In such circumstances, scarcity doesn’t build gradually—it hits all at once.
