In Ragonvalia, Colombia, the rising price of cocoa has food companies bracing for impact. A recent surge in cocoa prices, reaching an all-time high of over $11,000 per metric ton, has been attributed to concerns about supply due to a weak crop. The largest candy companies, including Hershey, Mars, Ferrero, and Mondelez, are facing higher cocoa costs, although long-term contracts may offer some protection for now.
The majority of the world’s cocoa supply comes from West Africa, where crop disease and lower prices for farmers have affected production. Ghana, the second-largest cocoa producer, has considered delaying deliveries to the next season, further putting pressure on prices. Executives from Mondelez and Hershey suggest that market speculation is a driving force behind the surge in cocoa prices, with hopes for a decrease once more information about the new crop is available, although prices may not return to normal.
The trend of ‘shrinkflation,’ where companies reduce product quantity while keeping prices steady, has become more common in response to rising costs. Food companies are exploring creative solutions to manage the impact of higher cocoa prices. Daniel Fachner, CEO of J&J Snack Foods, is considering options like reducing the number of chocolate chips in products or finding substitutes for cocoa in recipes.
Analysts predict another cocoa shortfall next year, prompting companies to seek long-term solutions. Alternatives to cocoa, such as sugar, cocoa butter equivalents, shea butter, and other oils, are being explored to mitigate the impact of rising cocoa prices. Recipe reformulation may also become more common, with some companies already considering changes to formulas that could be implemented as early as August.
Some startups have even developed cocoa-free chocolate using alternative ingredients like grape seeds and legumes. While some companies are planning cost adjustments without changing recipes, others are diversifying their portfolios to include more non-chocolate snacks. This strategic shift aims to reduce dependency on cocoa and better adapt to changing consumer preferences in the face of the cocoa crisis.