Life is like the volatile cocoa market—you never know what you’re going to get. But one thing’s for sure: This February, much like last year, consumers shopping for Valentine’s Day chocolates will be met with sticker shock as chocolate makers continue to pass on high cocoa prices to consumers.
What’s happening? Cocoa prices jumped nearly 180% last year, hitting prices just short of $13,000 per metric ton, with prices currently hovering just above $11,000. These record-high prices are a result of a global cocoa shortage driven by several factors, Oran van Dort, a commodity analyst at Rabobank, told Retail Brew. Severe weather in West Africa, the primary exporter of the world’s cocoa, impacted the cocoa crop; and a government policy in West Africa that sets fixed prices paid to farmers for their cocoa beans that fall much below the international prices has made farming the crop financially unsustainable, leading farmers to exit the cocoa business. Both factors have led to dwindling supply, pushing prices higher.
Those higher cocoa prices have led to price hikes from chocolate suppliers and ultimately brands. At Target, a king-size two-pack of Reese’s hearts rose 13% from $2.29 in February 2024 to $2.59 today, while a 10.8 oz bag of milk chocolate Hershey’s Kisses jumped 12% from $4.89 in January 2024 to $5.49 a year later. The price of a 6 oz. bag of Lindt milk chocolate truffles increased 5% from $5.69 in January 2024 to $5.99 today, while the price of its 85% cocoa dark chocolate bar jumped nearly 9% from $3.39 to $3.69.
What are chocolate makers saying now? Last month, chocolate supplier Barry Callebaut, which sells to companies like Unilever and Nestlé, reported sales volumes down 2.7% in its most recent quarter as the “highly challenging and volatile market environment” has softened demand, according to a company release. Barry Callebaut claimed cocoa prices were up more than 70% in the quarter, which has led to its customers delaying their orders, calling out North American food manufacturers in particular.
On its Q3 earnings call in November, Hershey reported a net sales drop after it hiked its chocolate prices. Within confectionery, small brands and private labels have impacted its market share, and the company said its “first priority is reigniting chocolate.” Its new head of US confection, Michael Del Pozzo, was hired in September and left months later, replaced last month by Keurig Dr Pepper vet Andrew Archambault.
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Some companies are looking for solutions: In December, Toblerone maker Mondelez invested in cell-based cocoa company Celleste Bio as the company evaluates ways to grow the strained cocoa supply, while Hershey invested $500 million to improve cocoa farming in West Africa. (Plus, Mondelez tried to buy Hershey earlier this year, Bloomberg reported, but Hershey said the bid was too low.)
But they’re not all struggling under the weight of higher prices, as Lindt chocolate maker The Lindt & Sprüngli Group reported this month its organic sales were up 7.8% in 2024. Growth was largely driven by mid-single-digit price hikes, the company said, and it plans to bump prices further this year.
How are consumers responding? As chocolate prices remain elevated, Richard Donahue, CMO of digital promotions company Ibotta, told Retail Brew via email that consumers could shift their behaviors, as some chocolate makers have begun to note.
“I’d expect it to play out similarly to other categories with some consumers simply not being able to absorb the increase as they prioritize their core purchases,” he said. “Others, tired of the increases everywhere, will simply shift their category purchases into similar but less impacted items, be it to a tangential category, a lower cost brand, or private label product.”
Per Ibotta, average private-label chocolate prices are down 4% from January to December 2024, while branded chocolate’s average prices have risen 17% over the same period. Private label chocolate sales have increased ~30% YoY, compared to non-private labels’ ~13% price increase.
And consumers have more private-label chocolate options this holiday: Target is selling a gift box of Favorite Day peanut butter-filled milk chocolate hearts for $0.83/oz (Reese’s offers a gift box of heart-shaped chocolates for $0.92/oz.), while Walmart’s Bettergoods brand launched a 12-count box of Belgian chocolate truffles for $1.18/oz.
Plus, some consumers have shifted to non-chocolate, lower-price-point candies like gummies.
When could this end? While higher cocoa prices and higher consumer prices were expected to lead to increased production and drop in demand resulting in a surplus, recent dry weather in West Africa has complicated things, van Dort said.
“It’s extremely hard to say where cocoa is going,” he said, but you can bet a bite of chocolate will continue to be bittersweet as consumer prices will remain high going forward this year.