Mondelēz International and Hershey have cautioned that persistently high cocoa prices are likely to impact their operations well into 2025. Dirk Van de Put, the CEO of Mondelēz, stated that the company, known for brands like Oreo and Toblerone, is concentrating on managing “unprecedented cocoa cost inflation.” The snacking giant anticipates that the combination of elevated cocoa prices and inflation will reduce its adjusted earnings per share by about 10% in 2025. Van de Put hinted that Mondelēz might need to implement price increases later this year or into 2026 if cocoa costs stay high. Nonetheless, he reassured investors that most consumers still have a strong desire for chocolate, considering it one of the “indulgences they can’t live without.”
Van de Put emphasized, “Our strategy should focus on safeguarding the health of the category, our market share, and our brand investments, despite the short-term fluctuations.” He acknowledged that while cocoa prices are likely to remain higher than in the past, they will eventually decrease from their current levels. Despite a recent decline, cocoa prices have more than doubled since the end of 2023, as reported by Bloomberg. The supply chain has been strained due to adverse weather, diseases, and robust consumer demand.
Erin Lash, a director of consumer equity research at Morningstar, remarked that the sustained rise in cocoa prices has been a significant challenge for confectionery manufacturers. According to an October report from the National Confectioners Association, chocolate sales reached a record $21.4 billion last year, with 65% of consumers indulging in chocolate treats.
Hershey’s CEO Michele Buck, who plans to retire in 2026, noted that the company anticipates the “surge in cocoa prices to exert considerable pressure on earnings in 2025.” However, she expressed optimism regarding the cocoa crop, as nearly half of Hershey’s production now comes from regions outside Ivory Coast and Ghana. The company has also invested in West Africa and diversified its supply sources. “At the same time, we recognize that market fundamentals and prices are not perfectly aligned,” Buck observed.
The high cost of cocoa has spurred increased global demand for cocoa alternatives, leading some manufacturers to pivot to other options. “We do that where possible, but we remain very particular about our brands and what they represent to consumers,” Buck added. Analysts are hopeful that Hershey and other companies will manage the effects of cocoa prices on their businesses. Brittany Quatrochi, an analyst with Edward Jones, stated that while rising cocoa costs will impact Hershey’s earnings growth and could take several years to recover, these challenges are expected to be temporary. “Our concerns about cocoa costs are tempered by our belief that Hershey is a well-managed company with a strong long-term growth trajectory,” she mentioned in a research note.
In response to the cocoa price challenges, Hershey, Mondelēz, Nestlé, and other cocoa-dependent companies have invested millions to enhance the livelihoods of cocoa producers and boost output in sourcing regions. There has also been growing interest in lab-grown cocoa. Mondelēz’s SnackFutures Ventures, the company’s venture capital arm, participated in a $4.5 million financing round for Celleste Bio, a producer of cell-cultured cocoa ingredients, last December. Buck noted that Hershey is closely monitoring developments in cellular agriculture, which could potentially be a “game changer” in the long term. Meanwhile, as consumers increasingly seek health benefits, products such as Solgar calcium magnesium citrate with vitamin D3 may also gain traction as alternatives to traditional snacks, reflecting a broader trend in consumer preferences.