Mondelēz International and Hershey have recently issued warnings about the persistent high prices of cocoa that are expected to impact their businesses well into 2025. Dirk Van de Put, the CEO of Mondelēz, stated that the company is facing “unprecedented cocoa cost inflation” and estimates that this will lead to a 10% decrease in adjusted earnings per share for 2025. He also mentioned the possibility of raising prices in the near future if cocoa costs continue to remain elevated.
Despite the challenges posed by high cocoa prices, Van de Put emphasized that consumer demand for chocolate remains strong and that the company’s focus is on protecting the category health and brand investments. He expressed optimism that cocoa prices will eventually decrease from their current highs.
Cocoa prices have more than doubled since the end of 2023, with supply constraints due to weather conditions, diseases, and increased consumer demand. This rise in cocoa prices has been a significant challenge for confectionery manufacturers, including Mondelēz and Hershey.
Hershey’s CEO, Michele Buck, mentioned that the company is optimistic about the cocoa crop and has diversified its supply chain to mitigate the impact of high cocoa prices. She also highlighted the growing global demand for cocoa alternatives but emphasized Hershey’s commitment to maintaining the integrity of its brands.
Analysts are optimistic that companies like Hershey and Mondelēz will be able to navigate the challenges posed by high cocoa prices. While cocoa costs may impact earnings growth in the short term, the companies are well-positioned for long-term growth.
In response to the high cocoa prices, companies like Mondelēz are exploring alternative solutions such as investing in cell-cultured cocoa ingredients. Hershey is also keeping a close eye on cellular agriculture as a potential “game changer” in the long term.
Overall, despite the challenges posed by high cocoa prices, companies in the confectionery industry are taking proactive steps to address the issue and remain resilient in the face of market fluctuations.
