People are selecting from an assortment of premium Lindt chocolates at the Lindt & Sprungli chocolate shop.
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Cocoa prices are beginning to ease after a record-breaking rally, but don’t expect cheaper candy just yet as the world’s biggest chocolate makers turn to social media-inspired products and other strategies to win shoppers back.
Cocoa prices reached record highs over the past two years, triggered by adverse weather conditions and poor cocoa harvests that pushed chocolate costs higher and dampened consumer sentiment.
However, the price of cocoa now appears to be falling.
Cocoa futures were last trading at $5327 per metric ton and are down 34% over the past year. The commodity surged to almost $12,000 per metric ton at the end of 2024. Cocoa prices typically hovered around $2,000 to $3,000 over the past two decades.
Cocoa futures over the past five years.
Swiss Chocolate giants Barry Callebaut, Lindt, and Nestlé all pointed to soaring cocoa prices as a drag on earnings.
Lindt said Monday that groupwide price increases of 11.8% led to chocolate sales volumes dropping 7.5% as fewer shoppers bought chocolate in the first half of the year.
“Record cocoa prices required unprecedented price increases across the industry, while geopolitical uncertainty, inflation and weak consumer sentiment weighed on demand,” Group CEO Adalbert Lechner said in an analyst call. “The crisis in the Middle East added another headwind with weaker tourism flows from Asia and the Middle East to Europe.”
The world’s largest chocolate and cocoa supplier, Barry Callebaut, said that while global consumers are buying 4.4% less chocolate in the third quarter than the same time last year, overall sales volumes for the company grew 5.7% in the quarter, turning positive for the first time in over two years. Additionally, its global cocoa sales accelerated 18% due to a market correction earlier this year.
Meanwhile, food and beverage firm Nestlé said higher cocoa and coffee prices hit its underlying trading operating profit in the first half of the year, dropping 2.8%. The firm’s confectionery business makes up 9.7% of its total sales. Nestlé expects to see margins benefit from cocoa prices coming down.
What’s happening with cocoa?
Cocoa prices’ volatile run was largely due to poor cocoa harvests in West Africa, which were worsened by weather patterns related to El Niño and climate change, resulting in tight supply.
El Niño is a weather phenomenon with warmer-than-average temperatures that occurs every two to seven years in the Pacific Ocean. Soaring cocoa prices in 2024 were largely due to a ‘strong’ El Niño that led to drier, hotter weather and erratic rainfall in West Africa, according to a December analysis by Dr Tanya Lander, a researcher at the Oxford Martin School Programme on the Future of Food.
“So, it is unsurprising that the El Niño weather was linked to poor cocoa harvests in both Côte…
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