In April of last year, cocoa prices reached significant heights, sending the sector into a tailspin. More specifically, they went from $2,500 per tonne in 2023 to more than $10,000 in 2024 – the highest in 46 years. This crisis has created significant uncertainty among producers, putting pressure on margins while also making it challenging to secure reliable ingredients, as supply becomes increasingly unstable.
Although prices have stabilized significantly since the height of the crisis, they are still considerably higher than they were before it began in 2024, with manufacturers seeking ways to adapt to this new normal.
What’s going wrong in the sector?
There are many reasons why the cocoa crisis is happening. First and foremost, the weather is becoming increasingly unpredictable due to the worsening effects of climate change, which means that cocoa farmers don’t have the optimal conditions necessary to produce the best yields. For instance, excessive rainfall lowers the temperature, which leads to a longer fermentation process for the cocoa beans.
At the same time, cacao swollen shoot virus is a significant issue in cocoa-growing regions of West Africa, causing streaks, blotches, and vein clearing on the leaves. In extreme situations, the leaves may fall off, causing distorted pods. Rates of infection have unfortunately been significantly high – one of the largest growing regions in Ghana reported an 81% infection rate only during the past year.
Gold mining in Ghana has been another factor that pushed up cocoa prices. Due to their low returns, cocoa farmers have begun to explore illegal gold mining, with substances from the process, such as lead, arsenic, and mercury, negatively impacting soil health.
Due to the cocoa crisis, major chocolate companies have been struggling significantly, as they were forced to increase prices, and some have even had to hedge their resources to lock in prices. With inflation affecting many economies, consumers have begun to reduce their spending on chocolate products. Not only that, but the average chocolate bar could become a luxury item compared to normal grocery purchases. For chocolate businesses, diminishing sales mean lower profits.
All of this shows the urgency of finding ways to navigate the current landscape in the cocoa industry. For example, buying cocoa wholesale can help mitigate price volatility and supply disruptions by enabling companies to secure larger quantities at a predictable price, and improve the stability and quality of the supply chain by building stronger relationships with farmers.
At the same time, companies must invest in farmers via programs that improve their lives and encourage the sustainable production of cocoa-free alternatives, enhancing long-term stability. Responsible sourcing of cocoa from a supplier like ofi can also make a difference, addressing issues like forced labor and curbing deforestation, among other things.
Cocoa-free alternatives: Are they the answer to soaring prices and environmental challenges?
Many chocolate companies are exploring cocoa-free alternatives as a solution to tackle the current crisis in the industry. Simply put, cocoa-free chocolate is created by mimicking the texture and taste of traditional chocolate, but without relying on cocoa beans. Instead, startups are experimenting with different climate-resilient ingredients.
One of the most notable is carob, referred to as the “first-gen substitute of cocoa”, which has gained wide recognition as a viable alternative to cocoa. Historically, carob has been used as a thickening agent and sweetener, and its nutritional benefits are notable: it is low in fat and doesn’t contain caffeine, unlike cocoa. It’s also rich in calcium, fiber, and antioxidants, which makes it a healthier option for those who want a guilt-free indulgence.
Due to its nutritional advantages, carob powder, which is produced by grinding roasted and dried carob pods, is commonly used as a substitute for cocoa powder, offering a similar chocolate-like flavor and being utilized in various carob-based products, such as truffles, chocolates, and baked goods. Besides carobs, other ingredients are used as substitutes for chocolate, including grape seeds, fava beans, and sunflower seeds.
These raw materials are processed through fermentation, grinding, roasting, and conching – methods that parallel conventional chocolate-making. These alternatives offer significant environmental benefits, including shorter supply chains, reduced water and land usage, and lower carbon footprints. Notably, fava beans’ carbon intensity is 0.23-0.58kg CO2e per kg, compared to 1.47kg CO2e for cocoa beans. Similarly, oats, fava beans, barley, and sunflower require 1,000-3,000m3 of water per ton of crop, while for cocoa, the water footprint is 18,876m3/ton.
Besides addressing environmental issues, cocoa-free products allow companies to align with customers’ demands and differentiate themselves in an increasingly competitive market. Modern consumers are increasingly seeking transparency and ethical sourcing, so offering cocoa-free alternatives allows brands to appeal to this market segment and position themselves as pioneers in food innovation.
How can technology help further?
Cocoa-free alternatives can undoubtedly make a difference, but they are not a magical solution that will solve all the problems. A strategic plan is needed, which requires continuous efforts from brands in advocating for fair wages and better working conditions for farmers, while also leveraging the full potential of science.
Modern biotechnology can play a significant role in addressing the challenges of the cocoa industry and has already developed numerous revolutionary products over the years – for instance, it has helped combat rare diseases. More specifically, bioreactors (which are essentially systems where cells are cultivated in a controlled environment) enable the growth of yeast, bacteria, or plant cells for various purposes.
When it comes to chocolate, bioreactor technology can produce essential chocolate ingredients, such as cacao butter, without relying on traditional cacao farming methods. The potential benefits are a more scalable and sustainable system that can transform the cacao sector. Some companies are already exploring this technology, but it’s worth noting that while the technology can replicate the quality of traditional cocoa, it’s crucial to educate consumers about the advantages of cell-cultivated cocoa in order to ensure market acceptance.
Takeaway
Without a doubt, the cocoa industry is experiencing one of its most turbulent periods in history, with rising prices posing a threat to long-term supply. Cocoa-free alternatives are an important part of the plan when it comes to tackling the current challenges, as they open up new possibilities for innovation, resilience, and sustainability, and while they may not entirely replace traditional cocoa, they can offer businesses a way to appeal to eco-conscious consumers, mitigate risks, and stand out in a competitive market. Ultimately, however, this solution alone isn’t enough, so it needs to be combined with responsible sourcing and groundbreaking technologies.
