High cocoa prices push processors to diversify into new markets

Surging cocoa prices and weaker chocolate sales are forcing global cocoa processors to rethink their business models and expand into new product categories. Companies are increasingly using cocoa in beverages, ice cream, bakery products, and other food applications to offset weaker demand for traditional confectionery products.

According to market participants, high cocoa prices have reduced chocolate sales, particularly in Europe and the United States. At the same time, demand is growing for products in which cocoa is only one ingredient, including protein bars, ready-to-drink shakes, and functional snacks. NielsenIQ data show that U.S. chocolate candy sales declined by about 4% over the past year, while sales of diet and nutrition products increased by 9%.

The world’s largest cocoa processors are also adjusting their strategies. Barry Callebaut, the world’s leading cocoa processor, is expanding its presence in adjacent food categories, while chocolate manufacturers are increasingly focusing on premium bakery products and desserts, where demand has remained more resilient than in the mass confectionery market.

Record-high cocoa prices have also prompted manufacturers to reformulate their products. Some companies are reducing cocoa content or switching to lower-cost ingredients. Barry Callebaut reported strong growth in sales of its ChoViva cocoa alternative made from sunflower seeds, while other manufacturers are increasing the use of cocoa powder, whose price has remained much more stable than cocoa butter.

Analysts believe cocoa prices could remain elevated due to weather risks in West Africa, where most of the world’s cocoa crop is produced. As a result, processors are expanding product portfolios, reducing the use of expensive cocoa ingredients, and exploring new applications to maintain profitability.

Tags: prices, cocoa