Cocoa prices are up, chocolate consumption is down for America’s favorite confection

Mary Leonard’s busy season that started pre-Halloween wraps up post-Valentine’s Day on Monday.

But the chocolatier and owner of Chocolat Céleste in St. Paul said it’s already felt like an “off” season.

“Everything I buy went up 45% at the beginning of the year,” Leonard said, referring to the rising cost of chocolate’s main ingredient, cocoa.

At least the higher costs aren’t slowing sales of her high-end confections: Customers in the market for an $86 box of 15 artisanal treats are typically less price sensitive than those reaching for a $13 carton of Russell Stover chocolates at the grocery store.

“I did have to take up prices,” Leonard said, “but people are not objecting.”

But Americans are skipping some of their everyday Hershey bars, it seems. U.S. chocolate consumption dropped in 2024 as prices for cocoa beans kept rising, according to a National Confectioners Association report. Drought and extreme weather in West Africa, where most of the world’s cocoa is grown, have severely limited harvests for several years.

The market for gourmet chocolate has been more resilient than “mainstream” bars and candies.

“The demand is still high. People are still willing to pay for the guilty pleasure to have a high quality treat,“ said Peter Remmelzwaal, head gourmet chef at Cargill’s Belgium-based House of Chocolate.

”For chefs and entrepreneurs, it is challenging. We see no decline in amounts, but margins are tighter for the businesses.”

There’s only so much cocoa to go around: Last year’s U.S. cocoa bean imports were at their lowest level in decades, according to the U.S. Department of Agriculture.

“The dramatic increase in cocoa prices has led U.S. confectioners to reduce the size of candy products and to feature a larger variety of other flavors during the major chocolate-sale seasons, such as Halloween, Valentine’s Day and Easter,” the USDA said in a recent report.

Consumers are already trending toward smaller sizes, Remmelzwaal said. But soon, they’ll be paying more for less.

The high cost of cocoa is expected to drive up the prices for Oreos, KitKats and other popular sweets, Piper Sandler analyst Michael Lavery reported.

Mondelez, which makes Oreos and Cadbury chocolate, is putting in “significant” price increases now, with more likely as the cost of cocoa remains higher than normal, Lavery wrote this month.

Already, compared with last year’s Valentine’s Day, the price consumers pay for chocolate is up 10% to 20%, GlobalData estimated. Cargill predicted Americans will buy 75 million pounds of chocolate for this year’s holiday.

The cost of cocoa beans had remained steady for decades. But West Africa’s increasingly dry climate might have permanently shifted the viability of cocoa crops, Mississippi State University professor Narcisa Pricope wrote this month.

“Without urgent action to address aridity, this scenario may become more common, and cocoa — and the sweet concoctions derived from it — may well become a rare luxury," she wrote.

The cocoa conundrum has affected Cargill’s U.S. chocolate operation, and the company recently said it will close a chocolate plant in Pennsylvania this year.

“We have decided to permanently stop production this summer, shift the Hazleton [Pa.] production volume to other North American Cargill Cocoa & Chocolate facilities and invest in new projects at these other facilities that will support evolving customer needs,” Cargill said in a statement.

The Minnetonka-based agribusiness is a major cocoa trader and chocolate processor that supplies food companies, bakeries and restaurants around the world. Those “evolving customer needs” involve smaller portion sizes and bold flavors like yuzu and blood orange, said John Satumba, vice president of global food innovation at Cargill. (Chocolat Céleste brought out a champagne-hibiscus variety for Valentine’s Day.)

“Then there’s a big trend around nutrition — the guilt-free indulgence,” Satumba said. “If I’m eating chocolate, can you add some fiber, add some protein?”

Nostalgia remains a huge selling point for chocolate, he added, especially with classic additions like caramel and peanut butter.

“Growing up in Zimbabwe, I loved caramels,” Satumba said. “And today, salted caramel and dark chocolate, it literally transports me back to Zimbabwe, as a kid going to high school, going to the store to get a treat.”

There’s also growing demand for cocoa alternatives, which high cocoa prices could support.

Several years ago, Cargill partnered with a startup that makes a Nutella-like spread without nuts or chocolate. Now, the ag giant is the distributor for Voyage Foods and starting to land the grape seed and sunflower spreads on Walmart shelves.

“This started in 2021, and we were convinced at the time people would not want to stop eating chocolate-like products if something happens in the cocoa market,” said Anne Mertens-Hoyng, who leads Cargill’s confectionery alternative to chocolate business. “We hope to expand globally.”

Bakers can use Voyage Foods products “wherever [they] see any chocolate or filling,” and at a molecular level, they capture much of what chocolate brings to the palate, she said.

Like with protein, where Cargill is a major player in meat and plant-based alternatives, the company tries to offer an “all-of-the-above” menu of options to its customers.

For the company’s top chocolatier, Remmelzwaal, only the real thing will suffice.

“I like it quite plain and pure,” he said. “I like the classic combinations with caramel or hazelnuts.”