Cocoa prices are falling. So why is chocolate still so expensive?

Cocoa prices are starting to fall after a record-breaking rally, but don’t expect cheap candy as the world’s biggest chocolatiers turn to products fueled by social media and other strategies to win over consumers.

Cocoa prices have hit record highs in the past two years, as bad weather and poor cocoa harvests have made chocolate more expensive and dampened consumer sentiment.

However, the price of cocoa now seems to be falling.

The future of cocoa they last traded at $5327 per metric ton and are down 34% over the past year. The commodity rose to about $12,000 per metric ton by the end of 2024. Cocoa prices have generally hovered around $2,000 to $3,000 over the past two decades.

Swiss Chocolate Giants Barry Callebaut, Lindtagain Nestlé everything pointed to the increase in cocoa prices as a drag on income.

Lindt said on Monday that the group’s price increase of 11.8% led to a 7.5% drop in chocolate sales as fewer consumers bought chocolate in the first half of the year.

“Record cocoa prices require unprecedented price increases across the industry, while geopolitical uncertainty, inflation and weak consumer sentiment are keeping pace with demand,” group CEO Adalbert Lechner said in an analyst call. “The crisis in the Middle East has added another storm when tourism is weakening from Asia and the Middle East to Europe.”

The world’s largest supplier of chocolate and cocoa, Barry Callebaut, said that although global consumers bought 4.4% less chocolate in the third quarter than at the same time last year, the company’s sales figures grew by 5.7% in the quarter, turning positive for the first time in two years. Additionally, its global cocoa sales grew by 18% due to the market correction earlier this year.

Meanwhile, food and beverage company Nestlé said higher cocoa and coffee prices hit its operating profit in the first half of the year, down 2.8%. The firm’s confectionery business accounts for 9.7% of total sales. Nestlé expects to see profit margins from falling cocoa prices.

Cocoa price volatility was largely due to poor cocoa harvests in West Africa, which were exacerbated by weather conditions associated with El Niño and climate change, resulting in less supply.

El Niño is a climate with warmer than average temperatures that occurs every two to seven years in the Pacific Ocean. The rise in cocoa prices in 2024 was largely due to a ‘strong’ El Niño that led to dry, hot weather and variable rainfall in West Africa, according to a December study by Dr Tanya Lander, a researcher at the Oxford Martin School Program on the Future of Food.

“Therefore, it is not surprising that El Niño weather has been linked to poor cocoa yields in Côte d’Ivoire and Ghana (where 60-70% of the world’s cocoa beans are produced),” Lander wrote.

Climate change and rising temperatures are also playing a role, with 2024 set to be the hottest year on record. Recent heat across Europe could also dampen consumer enthusiasm for chocolate, UBS analysts said in an early July note to Lindt.

Heat waves and rising temperatures in some of Lindt’s core European markets could affect chocolate demand, as sales in Europe, outside Eastern Europe, fell in the four weeks ending June 14, analysts said.

However, Barry Callebaut said that although a strong El Niño is guaranteed for 2026 and 2027 and creates a low risk to supply, the large surplus of 2025-2026 acts as a buffer, leading to a very different situation from 2023-2024.

Analysts at UBS expect Lindt to put a hedge on favorable prices for cocoa beans in 2027, a move they estimate could cut costs by up to 500 million Swiss francs.

Meanwhile, US President Donald Trump’s repeated tariffs have also had a short-lived but significant impact, causing price hikes and supply disruptions. Recently, the conflict in the Middle East has also affected Lindt’s global travel retail business by reducing travel.

With cocoa prices expected to recover, the terrorists are looking to regain their customer base by establishing premium formats for their product, as well as keeping a close eye on social media trends that young people engage with.

Lindt released its Dubai-style chocolate bar in December 2024, in an attempt to capitalize on the social media trend. Global sellers from Walmart at Trader Joe’s, Shake the shackand Harrods also sells chocolate from Dubai.

Lindt CEO Lechner said the company plans to expand its “social media presence” to create a seamless journey between promotion, discovery, and purchase.

“The incredible success of the launch of Dubai Style Chocolate demonstrated the growing power of social media in building awareness, engagement, and demand for our products,” Lechner said on the earnings call.

“This strategy helps us reach new audiences and strengthen our relevance to young consumers.”

Nestlé CEO Philipp Navratil echoed the sentiment, saying on an analyst call Thursday that the company plans to invest heavily in influencer marketing, a shift in the way the brand markets itself.

“It’s more digital, it’s more social, it’s more alive, it’s more fun. It’s finding out how younger consumers are engaging with the world,” Navratil said.

Both Barry Callebaut and Lindt focused on consumer interest in premium products for the remainder of the year, but were more creative in how they offered products rather than raising prices.

“By expanding our pricing structure, we can attract new consumers, increase purchase frequency, and provide additional touch points with the Lindt brand without compromising our premium positioning,” Lechner said.

Lechner pointed out that Lindt has selectively lowered prices in key markets such as Germany and Switzerland, especially during Christmas, to support consumer demand during its most important period. At the time, Barry Callebaut and Nestlé never talked about reduced prices.

Instead, Barry Callebaut is also leaning towards premium chocolate, growing its Gourmet business, which caters to chefs and bakers, while expanding high-end chocolate products.