Why cocoa is getting cheaper and chocolate is not

Despite a significant drop in cocoa prices, consumers are unlikely to see cheaper chocolate anytime soon. Cocoa futures are trading near $5,330 per metric ton, marking a 34% decrease from last year and a sharp fall from the $12,000 per ton reached in late 2024. This is a stark contrast to the typical $2,000-$3,000 range seen over the past two decades.

Major chocolate producers, including Lindt and Nestlé, are holding firm on prices. Their priority is to restore profit margins squeezed by soaring raw material costs and a slowdown in consumer spending. Lindt, for instance, saw sales volumes drop 7.5% after an 11.8% price increase in the first half of the year. The company's CEO attributed this decline to high cocoa prices, inflation, and weak consumer confidence, further impacted by Middle East tensions affecting tourism and travel retail.

Globally, chocolate consumption declined by 4.4% in the third quarter compared to the previous year, according to Barry Callebaut. However, the company itself saw overall sales volumes rise 5.7%, with cocoa sales up 18% as lower prices stimulated demand. Nestlé reported that higher cocoa and coffee costs reduced its operating profit by 2.8% in the first half, though it anticipates falling cocoa prices will eventually support its margins.

The recent surge in cocoa prices was driven by poor harvests in West Africa, caused by drought, high temperatures, and irregular rainfall exacerbated by El Niño. While El Niño remains a risk for 2026-2027, a projected surplus for 2025-2026 is creating a significant safety stock. Analysts at UBS estimate Lindt is well-protected through hedging, potentially saving up to 500 million Swiss francs.

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I’m just trying to work with the cards I’ve been dealt with this year. It’s new for me, this type of adversity.