We’re witnessing a seismic shift in one of our industry’s most beloved ingredients:
chocolate. With prices spiking nearly 300% over the last year, manufacturers face
unprecedented challenges in maintaining the balance between consumer demand
and production costs.
At OV, we’re at the front lines of this changing landscape. And we’re ready to guide
our partners through the chocolate market turmoil with innovative chocolate alternatives and
expert insights.
Table of Contents
Understanding the Chocolate Crisis
Given chocolate’s popularity and widespread use, the current crisis in the chocolate
industry has far-reaching implications. Several factors are contributing to this
situation:
- Disease and Aging Trees: The cocoa-producing regions, primarily the Ivory
Coast and Ghana (60% of the world’s cocoa production), are grappling with
diseases affecting cocoa trees and an ageing tree population. - Climate-Induced Drought: Changing weather patterns have led to droughts
in key cocoa-growing areas, further impacting production. - Low Farmgate Prices: Despite rising consumer prices, farmers aren’t seeing
significant increases in the prices they receive, reducing incentives to boost
production. - Growing Demand: Despite supply challenges, global demand for chocolate
continues to rise, creating a perfect storm of high prices and limited
availability.
While countries like Ecuador are increasing production, which may mitigate some
losses, industry experts predict that high chocolate prices will likely persist for the
foreseeable future.
The Enduring Appeal of Chocolate
Despite the challenges facing the chocolate industry, it’s essential to understand why
chocolate remains such a crucial ingredient across multiple food categories.
But with a staggering 92% of chocolate eaters agreeing that it’s good for one’s
mental health to indulge in chocolate from time to time (Mintel), it’s easy to see why. This sentiment underscores chocolate’s role not just as a flavour but as a source of
comfort and indulgence for consumers.
The widespread use of chocolate across various food sectors further emphasises its
importance. Mintel reports that in the past five years:
- 43% of global desserts and ice cream launches contained cocoa as an
ingredient - 32% of bakery products included cocoa
- 25% of breakfast cereal launches featured cocoa
These statistics highlight the pervasive influence of chocolate across the food
industry and the potential ripple effects of the current chocolate crisis.
With the effects felt across multiple product categories, manufacturers are looking for
innovative solutions that deliver the chocolate experience consumers crave whilst
effectively managing costs.
How manufacturers are managing the price hikes.
With prices rising companies will have to manage demand for chocolate carefully (JP
Morgan).
Firstly, it is essential to understand that these price increases directly affect consumer purchasing behaviour.
Where chocolate bars are concerned, 1 in 3 consumers report that they have bought less chocolate in the last 12 months due to financial concerns.* Furthermore, recent data shows that 38% of consumers agree that chocolate bar manufacturers should make their bars smaller rather than raise prices.**
This consumer sentiment provides some validation for manufacturers adopting
shrinkflation to navigate the current crisis. However, the impact of rising chocolate
prices extends far beyond just product size.
This shift in consumer behaviour underscores the urgency for manufacturers to find
innovative solutions to product development. These solutions must provide the
chocolate-flavour hit that consumers are looking for while minimising impact on
pricing.
The rise of vegan chocolate
And let’s remember that price is not the only reason consumers are looking for
chocolate alternatives. With more and more people eating a plant-based diet, the
share of plant-based launches continues to grow. In fact, more than one in five
consumers in Germany who have eaten chocolate in the last three months say they
have eaten more vegan chocolate**.
As most analysts will attest, the plant-based trend is here to stay. Possibly fuelled by
the pandemic, health and well-being are bigger drivers than ever before.
Despite this growth, plant-based brands still struggle with the perception that plant-
based products lack taste and indulgence. This means brands must work hard to
create strong flavour profiles to impress the plant-based consumers’ palette.
For some, Brownie fudge with cocoa brownie flavour and a rich chocolatey flavour is
perfect. It adds flavour and chewy texture to plant-based ice cream, cereal bars,
bakery products, and pastries.
Chocolate alternatives
It’s no wonder that at OV, we’re seeing a rising demand for chocolate alternatives for
their baked goods, cakes, and ice cream.
Fortunately for manufacturers, these chocolate alternatives are available in a variety
of formats to add taste and texture to inclusions, toppings, and decorations. They
can be both bake-stable and freeze-thaw resistant and are therefore suitable for
applications such as bakery, ice cream, and toppings.
For example:
Cocoa-dusted sugar pearls add colour, crunch, and flavour, making them a perfect
topping for bakery, ice cream, and beverages.
Cocoa strands add chocolatey flavour and visual appeal to many a sweet treat.
Or how about chocolate brownie fudge, suitable for baking, inclusion, or texturing?
Embracing the chocolate challenge
The chocolate crisis presents significant challenges; it also offers opportunities for
innovation and growth. Confectionery manufacturers can weather this storm and
build customer loyalty by embracing alternatives and new formulation strategies.
At OV, we’re committed to being your partner in this journey. Our team of experts is
ready to develop custom solutions that meet your specific needs and help you thrive
in this new landscape.
The future of chocolate may look different from its past, but with innovation,
creativity, and a willingness to adapt, we believe it can be even sweeter. Let’s work
together to shape that future.
