As cocoa prices melt down, real chocolate is making a comeback

(This May 20 story has been republished without any changes to the text)

By May Angel, Alexander Marrow and Marcelo Teixeira

LONDON/NEW YORK, May 20 (Reuters) – After a year of smaller bars, extra wafers and chocolate alternatives, at least one major chocolate maker is reintroducing cocoa – and others may follow suit – as a slump in bean prices since 2024 makes the traditional treat more profitable.

This shift, resulting from a nearly 70% decline in cocoa futures contracts from end-2024 records, promises lower shelf prices for consumers, a recovery in demand for cocoa farmers and a partial return to chocolate alternatives made with too little cocoa to qualify as chocolate.

US-based confectionery manufacturer Hershey has publicly announced its plans to increase the cocoa content in chocolate alternatives called chocolate candy.

After the grandson of the Reese’s founder criticized Hershey for turning some iconic Reese’s products into chocolate candy, the company said it would revert to the original recipes of all Hershey’s and Reese’s products starting next year.

Other companies are likely to follow suit, industry participants and experts such as independent consultant Roger Bradshaw said.

“At current cocoa price levels, it certainly makes sense to return to real chocolate,” he said.

Snack maker Mondelez did not respond to requests for comment on the chocolate recipes, while Nestle had no immediate comment.

Ferrero said its recipes were not driven by short-term input price fluctuations but did not comment on changes in cocoa use.

COCOA PRICE IS FALLING

After cocoa prices nearly tripled to more than $12,000 per ton in 2024 due to adverse weather conditions and disease, chocolate manufacturers began reducing bar sizes, adding more wafers, fruits and nuts, and offering chocolate alternatives.

They also reduced cocoa stocks, raised prices and increased investment in products such as ChoViva, a cocoa-free chocolate alternative made from sunflower seeds and oats. The product, developed by German startup Planet A Foods, is sold through a partnership with Barry Callebaut, the world’s largest chocolate producer and cocoa processor.

This has caused a sharp decline in demand for cocoa, with experts saying a 70% drop in bean prices from late 2024 peaks.

Veteran analyst and leading world expert on cocoa, Steve Wateridge, said demand could hit a nine-year low in the 12 months to the end of September. However, he said the decline in cocoa prices should lead to a recovery in demand from the second half of the year.

“All of the factors that are driving us to these price declines will probably be resolved,” Wateridge said.

LOWER CHOCOLATE PRICES, MORE COCOA DEMAND

It can take up to 10 months for cocoa price changes to be reflected in chocolate’s retail prices because chocolate manufacturers hedge or fix purchase prices months in advance and hold large inventories.

Supermarkets and other buyers have been pressuring chocolate makers to reduce prices since mid-2025. Some bowed.

Mondelez said last month that it had cut chocolate prices slightly in Europe and was starting to see an increase in sales volumes.

Barry Callebaut, which uses ingredients used in a quarter of the world’s chocolate bars, expects sales volume to rise between 1% and 5% on a year earlier in the six months to August, according to Reuters calculations based on the firm’s first-half results.

The company, which supplies chocolate for Nestle’s Kit Kat bars and The Magnum Ice Cream Company, says producing chocolate at current cocoa prices could be cheaper than making chocolate-flavored alternatives that use vegetable oil instead of cocoa butter.

Chief Executive Hein Schumacher said in April that this meant “some customers will return to chocolate”, without naming any companies involved.

There are also legislative moves in some regions shifting the focus to cocoa.

Brazil, the world’s sixth-largest consumer of chocolate per capita, signed a law earlier this month requiring products labeled as dark chocolate to contain at least 35% cocoa solids.

The move brings Brazil closer to markets such as Europe and North America by tightening cocoa content requirements.

A SLOW RETURN

The return to more traditional chocolate could be good news for the nearly 2 million poverty-stricken cocoa farmers in the largest producers, Ivory Coast and Ghana, as it bodes well for cocoa demand and bean prices.

However, it will likely take time for volumes to return to the levels seen before the price rise.

“I estimate it will take 2.5 years to get back to where we were before 2023/24 in terms of demand,” said an experienced cocoa consultant and former trader who asked not to be named.

This, he said, was due to trends that, although marginal, gathered collectively. These include Generation Z being more open to innovations such as cocoa-free chocolate and the impact of weight loss drugs on people’s eating habits.

But while chocolate makers fear cocoa prices will rise again, some alternatives are likely to remain.

Vontobel analyst Jean-Philippe Bertschy stated that this is because the products continue to be profitable in the mass market segment.

(Reporting by May Angel, ​Alexander Marrow and Marcelo Teixeira; Additional reporting by Richa Naidu; Editing by Simon Webb and Bernadette Baum)