The recent slump in cocoa futures has prompted at least one large chocolate maker to abandon some of the cocoa-light substitutions adopted during the 2024 price spike, and industry sources say others may follow. The move back toward greater cocoa content is being driven by a near 70% fall in cocoa futures from their late-2024 peaks, which has reshaped the economics of chocolate production and opened the door to lower retail prices and a potential increase in bean demand.
U.S.-based Hershey has publicly announced plans to restore cocoa to a number of items that had been reformulated. After public criticism from the grandson of the creator of Reese's about changes that led certain Reese's products to be classified as "chocolate candy" rather than chocolate, Hershey said that from next year all Hershey's and Reese's items will revert to their original recipes.
Consultants and industry participants said that other companies are likely to track the move. Independent consultant Roger Bradshaw was quoted saying it makes economic sense to switch back to full chocolate at current price levels. Mondelez did not respond to requests for comment on its formulations, and Nestle and Ferrero had no immediate comment.
How the cocoa market turned
In 2024, cocoa prices surged, at one point approaching and briefly exceeding $12,000 per metric ton, as adverse weather and disease affected major growing regions. In response, chocolate makers adopted a range of cost-saving measures: shrinking bar sizes, increasing the proportion of wafers, fruit and nuts, drawing down stockpiles, raising retail prices, and investing in alternatives that reduced or eliminated cocoa.
One such product is ChoViva, a cocoa-free alternative made from sunflower seeds and oats developed by German startup Planet A Foods and sold via a partnership with Barry Callebaut, the world’s largest chocolate maker and processor. Producers also shifted purchasing and inventory strategies, which contributed to a marked reduction in cocoa demand and helped push bean futures down roughly 70% from their late-2024 records.
Market observers have pointed to weakening demand as a driver of the price collapse. Steve Wateridge, an experienced cocoa analyst, warned that demand could reach nine-year lows in the 12 months to the end of September. At the same time, he said the same forces that depressed prices are likely to reverse and expected a recovery in demand beginning in the second half of the year.
Transmission to retail and signs of recovery
Cocoa price movements do not translate to retail prices overnight. Chocolate makers often hedge purchases months ahead and hold substantial inventories, so it can take roughly 10 months for lower bean prices to feed through to shop shelves. Retail buyers have been pushing suppliers to cut prices since about mid-2025, and some manufacturers have responded.
Mondelez said it had reduced selected chocolate prices in Europe last month and was seeing sales volumes lift. Barry Callebaut, which supplies ingredients for products including Nestle's Kit Kat and Unilever's Magnum ice cream, expects sales volumes to grow between 1% and 5% in the six months through August compared with a year earlier, according to calculations based on the company’s first-half results. Barry Callebaut's chief executive, Hein Schumacher, has said that at current cocoa prices producing real chocolate can be cheaper than making chocolate-flavored alternatives based on vegetable fats, and that some customers are reverting to chocolate.
Regulation is also nudging reformulation choices in some markets. Brazil recently enacted a law requiring that products labeled as dark chocolate contain at least 35% cocoa solids, bringing its requirements closer to those in Europe and North America and tightening cocoa-content rules for that market.
Implications for farmers and the pace of recovery
A broader return to higher-cocoa recipes would be welcomed by cocoa growers in Ivory Coast and Ghana, where nearly two million smallholders live in poverty. Higher demand and firmer bean prices would improve income prospects for these producers.
Yet, multiple industry experts caution that volume recovery to pre-rally levels is likely to take time. A veteran cocoa consultant and former trader, who asked not to be named, estimated it could take about 2.5 years for demand to return to levels seen before the 2023/24 price surge. She cited a number of marginal but collectively meaningful factors slowing a rapid rebound, including a segment of younger consumers being more open to cocoa-free innovations and evolving eating patterns related to weight-loss drugs.
At the same time, some alternatives may remain in the market because chocolate makers remain wary that cocoa prices could rise again. Jean-Philippe Bertschy, an analyst at Vontobel, noted that cocoa-free or reduced-cocoa products still offer attractive margins in the mass-market segment, a structural factor that could preserve demand for such formats.
What to watch next
Industry watchers will be monitoring several indicators to gauge whether the pivot back to higher cocoa content gains traction: the degree to which retailers pass lower bean costs to consumers, whether large confectioners publicly reverse reformulations beyond the Hershey announcement, reported sales-volume trends at major suppliers such as Barry Callebaut, and any further regulatory changes that tighten labeling and cocoa-content rules in key markets.
Key points
- The near 70% fall in cocoa futures from late-2024 peaks has made higher-cocoa formulations more economically viable for chocolate makers.
- Hershey has committed to restoring original Hershey's and Reese's recipes from next year after criticism over reformulations; industry suppliers indicate more companies could follow.
- Lower cocoa prices can take roughly 10 months to affect retail chocolate prices, and early signs of volume recovery are visible at some firms and suppliers.
Risks and uncertainties
- Demand recovery may be slow - A veteran consultant expects roughly 2.5 years to return to pre-2023/24 demand levels, delaying benefits to farmers and processors. This affects the agricultural and food manufacturing sectors.
- Structural shifts - Consumer openness to cocoa-free innovations, particularly among younger cohorts, and changing eating habits linked to weight-loss drugs could reduce long-term cocoa demand, impacting confectionery and alternative-ingredient businesses.
- Pricing and volatility risk - Chocolate makers remain concerned about possible future cocoa price spikes, which could sustain a market for cheaper, cocoa-light or cocoa-free alternatives in mass-market segments, affecting commodity markets and CPG product mix decisions.