Global cocoa prices are beginning to retreat after a record-breaking rally over the past two years, offering relief to chocolate manufacturers. However, consumers are unlikely to see cheaper chocolate anytime soon as major confectionery companies continue to navigate high production costs while using premium products and social media-driven marketing to stimulate demand.
Cocoa futures were recently trading at $5,327 per metric tonne, down 34 per cent over the past year after peaking at nearly $12,000 per metric tonne at the end of 2024. For much of the past two decades, cocoa prices had typically ranged between $2,000 and $3,000 per metric tonne.
The surge in cocoa prices was driven by poor harvests in West Africa, where Côte d’Ivoire and Ghana account for about 60 to 70 per cent of global cocoa production. Adverse weather linked to a strong El Niño event, coupled with the effects of climate change, tightened supplies and sent prices soaring.
The sharp increase forced leading chocolate manufacturers to raise prices, dampening consumer demand and weighing on earnings.
Swiss chocolatier Lindt said group-wide price increases of 11.8 per cent led to a 7.5 per cent decline in chocolate sales volumes during the first half of the year as consumers reduced purchases.
“Record cocoa prices required unprecedented price increases across the industry, while geopolitical uncertainty, inflation and weak consumer sentiment weighed on demand,” Lindt Group Chief Executive Officer Adalbert Lechner said during an analyst call.
He added that the crisis in the Middle East further affected the company’s travel retail business by reducing tourism from Asia and the Middle East into Europe.
Barry Callebaut, the world’s largest chocolate and cocoa supplier, also reported weaker global chocolate consumption, with consumers buying 4.4 per cent less chocolate in the third quarter compared with the same period last year.
Despite the broader market slowdown, the company recorded a 5.7 per cent increase in sales volumes during the quarter, marking its first positive growth in more than two years. Global cocoa sales also rose 18 per cent following a market correction earlier this year.
Nestlé likewise reported that elevated cocoa and coffee prices reduced its underlying trading operating profit by 2.8 per cent in the first half of the year. The company’s confectionery division contributes nearly 10 per cent of total sales, although it expects lower cocoa prices to improve profit margins in the months ahead.
Analysts attribute the cocoa price rally largely to weather disruptions across West Africa. According to research by Dr Tanya Lander of the Oxford Martin School Programme on the Future of Food, the strong El Niño event brought hotter, drier conditions and erratic rainfall, contributing to poor cocoa harvests in both Côte d’Ivoire and Ghana.
Climate change has also intensified production challenges, with 2024 recorded as the hottest year on record. More recently, heatwaves across Europe have raised concerns about weaker chocolate demand during warmer weather
Although Barry Callebaut warned that another strong El Niño has been forecast for 2026 and 2027, posing fresh risks to cocoa supplies, it said a projected global cocoa surplus for the 2025–2026 season provides a significant buffer, making current market conditions less severe than those experienced in 2023 and 2024.
UBS analysts also estimate that Lindt has secured favourable cocoa prices through hedging for 2027, potentially reducing costs by as much as 500 million Swiss francs.
Beyond weather-related challenges, the industry has also faced disruptions from US President Donald Trump’s reciprocal tariffs, which briefly pushed prices higher and disrupted supply chains.
With cocoa prices now easing, chocolate manufacturers are shifting attention from price increases to innovation and marketing in an effort to rebuild demand.
Lindt has sought to capitalise on social media trends through its Dubai-style chocolate bar, launched in December 2024 following the product’s viral popularity online. The company plans to expand its digital marketing strategy to attract younger consumers.
“The extraordinary success of our Dubai Style Chocolate launch demonstrated the growing power of social media in building awareness, engagement, and demand for our brands,” Lechner said.
“This strategy is helping us reach new audiences and strengthen our relevance with younger consumers.”
Nestlé is adopting a similar approach. Chief Executive Officer Philipp Navratil said the company plans to invest more heavily in influencer marketing and reshape its advertising strategy.
“More digital, more social, more organic, more fun. Tapping into how younger consumers engage with the world,” Navratil said during an analyst call.
Rather than cutting prices significantly, major chocolate makers are focusing on expanding premium offerings while introducing products across a wider range of price points.
Lechner said Lindt has selectively reduced prices in key markets such as Germany and Switzerland during the Christmas season to encourage purchases without undermining the brand’s premium positioning.
Barry Callebaut is also expanding its premium Gourmet business, supplying chefs, bakers and specialty chocolate manufacturers, while Nestlé continues to position itself for improved profitability as cocoa prices gradually decline.
