Cocoa prices are starting to ease after hitting record highs, with the end of surge in sight. But according to the latest report from RaboResearch, prices will not return to pre- “cocoa crisis” levels.
The report found on a retail level, consumers could expect respite from price increases, but the higher prices were a new normal for the industry.
The report said chocolate manufacturers and retailers were adapting by balancing cost recovery with consumer retention.
RaboResearch agriculture analyst, Paul Joules, said since 2021, retail chocolate prices globally have surged, driven by a cocoa market in crisis due to poor harvests, crop disease and structural supply issues.
“This has led manufacturers and retailers to expand their value ranges, offering more affordable alternatives to cost-conscious shoppers,” Joules said.
Manufacturers strategies
Joules said chocolate manufacturers are employing strategies like “shrinkflation” and “skimpflation” to protect margins without losing consumers.
“Shrinkflation involves reducing pack sizes, while skimpflation changes recipes to lower cocoa content, often replacing cocoa butter with cheaper fats or fillers,” he said.
Mr Joules said in some European markets, these changes have altered products to the extent that they no longer meet the legal definition of “chocolate,” forcing brands to update product descriptions.
Worst behind us
Mr Joules said the worst of the “cocoa shock” appears to be over, with cocoa futures expected to fall significantly by mid-2027.
However, he said, global cocoa prices will remain above “pre-crisis” levels due to ongoing structural issues such as aging cocoa trees, crop disease, and climate swings, which means retail prices – including in Australia – could be slow to fall.
While chocolate prices are projected to ease gradually, they will still be higher than in 2021, the report says.
Ongoing adaptation
Chocolate manufacturers are adapting to a volatile market by embedding shrinkflation and skimpflation into long-term strategies.
Joules said major industry players are investing in novel cocoa cultivation techniques and cocoa-free innovations to reduce reliance on a single supply chain, aiming to expand choice and build future resilience.
“Technologies such as lab-grown cocoa and precision fermentation are part of this strategic shift,” he said.
“The chocolate market is entering a new era of higher costs and persistent volatility, requiring agility and continuous adaptation from industry players. While the peak of chocolate retail price inflation may be behind us, the pressure remains, and the industry is hedging its bets for a resilient future.”
