Chocolate makers show why chocolate is expensive even as cocoa eases

Chocolate makers are giving investors a clear answer to why chocolate is expensive even though cocoa prices have started to cool: the cost shock has already moved through supply chains, and shoppers are still reacting to higher shelf prices. Lindt, Barry Callebaut and Nestlé all pointed to cocoa costs as a drag on demand or profit, while saying lower cocoa prices could help them rebuild sales.

Cocoa futures were recently trading at $5,327 per metric ton, down 34% over the past year, according to CNBC market data. That is far below the nearly $12,000 per metric ton level reached at the end of 2024, but still above the $2,000 to $3,000 range where cocoa commonly traded over much of the past two decades.

For retail investors, the read-through is straightforward: lower commodity prices do not immediately mean cheaper chocolate bars. Food companies often buy ingredients ahead of time, set contracts with retailers, and adjust package sizes, promotions and pricing over months rather than days.

Why is chocolate still expensive?

Chocolate remains expensive because manufacturers raised prices after cocoa hit record levels, and those increases are still affecting consumer behavior. A commodity future is a traded contract for delivery of a raw material later, so a falling futures price can signal relief ahead without instantly changing what companies paid for earlier supplies.

Lindt said Monday that group price increases of 11.8% helped push chocolate sales volumes down 7.5% in the first half of the year. On an analyst call, CEO Adalbert Lechner said record cocoa prices forced unusually large increases across the industry, while inflation, geopolitical uncertainty and weak consumer sentiment also hurt demand.

Barry Callebaut, the world’s largest chocolate and cocoa supplier, said global consumers bought 4.4% less chocolate in the third quarter than a year earlier. The company also reported that its own sales volumes rose 5.7% in the quarter, turning positive for the first time in more than two years, and that global cocoa sales increased 18% after a market correction earlier this year.

Nestlé said higher cocoa and coffee prices weighed on first-half underlying trading operating profit, which fell 2.8%. The company said confectionery accounted for 9.7% of total sales and expects lower cocoa prices to help margins.

What pushed cocoa prices up?

The cocoa squeeze came largely from weak harvests in West Africa, where weather hurt supply. Dr. Tanya Lander, a researcher at the Oxford Martin School Programme on the Future of Food, wrote in a December analysis that a strong El Niño contributed to hotter, drier and more erratic weather in West Africa.

El Niño is a recurring Pacific Ocean weather pattern linked to warmer-than-average temperatures that can disrupt rainfall in other regions. Lander said poor harvests in Côte d’Ivoire and Ghana were unsurprising because those two countries produce 60% to 70% of the world’s cocoa beans.

Climate change and rising temperatures have added pressure, with 2024 recorded as the hottest year on record. UBS analysts said in an early July note on Lindt that heatwaves and warmer weather in core European markets could weigh on chocolate demand, noting European sales excluding Eastern Europe declined in the four weeks ended June 14.

Barry Callebaut said a strong El Niño has been confirmed for 2026 and 2027 and remains a supply risk, but it also said a large 2025-2026 surplus provides a buffer that makes conditions different from 2023-2024.

How chocolate companies are trying to win shoppers back

With customers pulling back, chocolate companies are turning to product launches, premium formats and more digital marketing rather than relying only on higher prices.

Lindt launched a Dubai-style chocolate bar in December 2024 to tap into a viral social media trend. Lechner said on the company’s earnings call that the launch showed the growing role of social media in creating awareness, engagement and demand, and said Lindt plans to expand its social media presence to reach younger consumers.

Nestlé CEO Philipp Navratil told analysts Thursday that the company plans to spend more on influencer marketing and shift its advertising toward more digital and social channels. Barry Callebaut is also focusing on premium chocolate through its Gourmet business, which supplies chefs and bakers, and through higher-end specialty products.

Lindt has selectively lowered prices in markets including Germany and Switzerland, especially around Christmas, according to Lechner. Barry Callebaut and Nestlé have not announced similar price cuts.

This story draws on original reporting from CNBC.