Oregon State University will receive $180,000 to address challenges such as invasive species, diseases, and weed management in the Willamette Valley, which accounts for 99% of U.S.-grown hazelnuts. Rutgers University will receive $160,000 to continue its work breeding trees resistant to the Eastern Filbert Blight, a fungal disease that impacts hazelnut orchards in New Jersey and other eastern states.

“Our mission is to master the hazelnut value chain from end-to-end to create and deliver value for customers, brands, and products,” said Tommaso de Gregorio, head of Ferrero’s Agri Competence Centre, in a statement.

Ferrero has a long history of investing in hazelnut sustainability and supply chain optimization. To date, the company has contributed over $760,000 to OSU agricultural programs and has made significant strides in improving the traceability of its hazelnut supply chain, achieving 90% visibility across its global sourcing operations.

The company’s latest investment reflects its commitment to diversifying hazelnut sourcing in North America, particularly as demand peaks during seasonal celebrations. In addition to its U.S. sourcing efforts, Ferrero also sources hazelnuts from countries such as Italy, Turkey, and Chile.

Ferrero operates 37 manufacturing plants worldwide with U.S. facilities in Illinois, Georgia, Kentucky, Ohio, Arizona, Pennsylvania, and New Jersey. These facilities are supported by investments in logistics, research and development, and partnerships, such as a 2019 collaboration with software provider Alloy to enhance supply chain efficiency and reduce food waste.

This investment not only strengthens Ferrero’s supply chain but also bolsters its sustainability initiatives, reinforcing its position as a global leader in the confectionery industry.

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This move builds on Hershey’s “Cocoa for Good” program, which targets key issues such as poverty, child welfare, and environmental sustainability in West Africa, the region responsible for the majority of the world’s cocoa production. The initiative includes efforts to increase household incomes, eliminate child labour, and implement a zero-deforestation policy, all while improving access to nutrition for farming families.

The company aims to stabilize the cocoa supply through better yields and healthier, well-trained farmers, leading to a more sustainable farming environment. The partnership with Côte d’Ivoire’s cocoa cooperatives formalizes this effort through a “memorandum of understanding” that primarily focuses on improving farmers’ livelihoods.

Hershey’s initiative coincides with rising global cocoa prices, which have doubled since early 2024 and are expected to stay high through September 2025, according to Wells Fargo. The cost increase has prompted companies like Hershey and Mars to raise prices on their chocolate products.

In a June ESG report, Hershey announced its goal of achieving full sourcing visibility for its cocoa in both Côte d’Ivoire and Ghana by 2025. The company has already invested 51% of its $500 million commitment into the “Cocoa for Good” program as of December 2023, demonstrating its dedication to this initiative.

The announcement was made alongside the annual National Cocoa and Chocolate Days in Abidjan, Côte d’Ivoire. Tricia Brannigan, Hershey’s vice president and chief procurement officer, emphasized the need for a collaborative approach, stating, “Improving farmer incomes requires a holistic approach and collaboration across public and private sectors.”

With this investment, Hershey aims to ensure a more sustainable future for cocoa farmers and secure the long-term viability of the chocolate industry.

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Industry analysts and traders predict further challenges for Nestle and its competitors as they face declining sales volumes in confectionery products. Chocolate manufacturers typically purchase cocoa up to 12 months in advance of production and sales. When cocoa prices tripled in the first quarter of this year, many in the industry were still compelled to stock up on the essential commodity, as reported by cocoa traders to Reuters.

“Production costs for chocolate makers will definitely rise in the fourth quarter due to pre-purchased cocoa contracts, which are paid for upon receipt of goods,” commented a Europe-based cocoa trader.

The anticipated increase in production costs is expected to be passed on to consumers and retailers in the fourth quarter, a crucial period for the industry with significant sales around Halloween and Christmas. “If pricing pressures occur, they will likely start in the fourth quarter, especially towards Christmas, a peak season for chocolate,” said Bruno Monteyne, an analyst at Bernstein. “Christmas won’t necessarily be cheap.”

Nestle, known for products such as Aero bars, Milkybar, Quality Street, Milo drinks, and Nesquik shakes, has declined to comment ahead of its first-half earnings report. Meanwhile, Swiss chocolate maker Lindt & Spruengli announced on Tuesday that it would need to further increase prices due to high cocoa costs.

“The situation is indeed concerning for the entire industry,” noted Jean-Philippe Bertschy, expressing worries about potential sales volume impacts in 2025 if price hikes persist. “Overall sales in the chocolate sector have been depressed so far this year,” he added.

Nestle has seen its market share in the European chocolate confectionery sector decline for 14 consecutive quarters in favour of cheaper brands and private label products, according to NielsenIQ data analysed by Bernstein. Despite this, value sales have increased in most quarters, driven by higher prices. For instance, a pack of six regular Kit Kat bars costs £6.99 ($9.03) on Amazon UK, with six Kit Kat Chunky bars priced at £12.99.

Swiss chocolate manufacturer Barry Callebaut reported a 0.3% drop in sales volumes for its third quarter ending in May, attributing the rise in costs to high cocoa prices. While declines in the prices of other commodities such as soy and wheat have helped mitigate some costs, some companies are adjusting recipes to use less cocoa.

However, Nestle has maintained that it will not alter the recipe of its Kit Kat bars. CEO Mark Schneider has reiterated this stance in previous earnings reports, ensuring the company’s commitment to maintaining product quality despite rising costs.

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Over the past year, cocoa prices have seen a dramatic increase, attributed to factors such as adverse weather conditions, supply chain disruptions, and increased demand. This price surge has led to higher profits for chocolate companies and intermediaries in the supply chain. However, the financial windfall has not trickled down to the farmers who cultivate the cocoa, many of whom continue to struggle with low incomes and challenging working conditions.

Major chocolate manufacturers, including industry giants, have reported record earnings, benefiting from their ability to pass on the increased costs to consumers. The higher retail prices of chocolate products have not deterred consumption, as global demand for chocolate remains robust. This situation has allowed these companies to maintain their profit margins and, in some cases, even expand them.

On the other hand, cocoa farmers, primarily located in West Africa, which produces over 70% of the world’s cocoa, have seen little improvement in their livelihoods. Despite the higher market prices for cocoa, many farmers receive only a fraction of the final price due to the structure of the supply chain, which is dominated by a few large corporations. This has led to increased calls for fair trade practices and better support for farmers to ensure they receive a more equitable share of the profits.

The disparity in earnings is further exacerbated by the lack of infrastructure and resources available to cocoa farmers. Many operate small farms with limited access to modern agricultural techniques and financial services, making it difficult for them to increase their productivity or negotiate better prices for their cocoa beans. The ongoing challenges of climate change, which affect cocoa yields, also add to their difficulties.

Efforts to address these issues have been ongoing, with various initiatives aimed at improving the conditions for cocoa farmers. Organizations advocating for fair trade have been pushing for policies that ensure a more balanced distribution of profits within the cocoa supply chain. These initiatives emphasize the importance of sustainable farming practices, better access to markets, and fair pricing mechanisms to support the economic well-being of cocoa farmers.

The current cocoa price surge has once again brought to light the need for systemic changes in the cocoa industry. While the financial gains are substantial for large chocolate companies, the true cost of these profits is borne by the farmers, who remain at the mercy of market fluctuations and structural inequities. Addressing these disparities is crucial for creating a more sustainable and fair cocoa market that benefits all stakeholders, from farmers to consumers.

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Samir Jain, President of Mondelez India, highlighted the positive impact of a good monsoon on consumer sentiment and economic stability. “A good and well-distributed monsoon is crucial for agricultural productivity and overall economic health,” Jain said in his first major interview since taking the helm last year. He added that the stability of the government and its welfare-focused policies are key factors that could boost economic growth and consumer confidence.

Despite these positive indicators, Jain noted that record-high cocoa prices are a significant concern. “Cocoa prices have surged to unprecedented levels, impacting our costs substantially. While prices have slightly decreased from the peak of over $11,000 per metric tonne in April, they remain more than double compared to last year,” he explained. This inflationary pressure is expected to influence product pricing, although Mondelez aims to manage this with a careful and measured approach.

Mondelez plans a major investment of ₹4,000 crore in India over the next four years, focusing on expanding manufacturing and strengthening the supply chain to meet rising demand. India, a crucial market for Mondelez, generates approximately $1.2 billion in revenue for the parent company and controls nearly two-thirds of the country’s chocolate market. Cadbury Dairy Milk holds a leading market share in India, making it one of Mondelez’s top-performing brands globally, alongside Oreo, for which India is the third-largest market after the US and China.

Cocoa prices have typically hovered around $2,500 per metric tonne in recent years, but the recent surge to over $11,000 has led to increased costs. “The inflation we are experiencing is unlike anything seen in decades. We anticipate further inflationary impacts into the second half of next year, but we plan to adjust our pricing strategies carefully,” Jain emphasized.

The chocolate and confectionery sector in India is valued at around ₹25,000 crore, with each category contributing roughly half to the overall industry. Last year, the sector saw double-digit growth in impulse categories like candies and chocolate bars, even as the broader FMCG market slowed down. With India’s per capita chocolate consumption at around 200 grams per year, compared to over 10 kilograms per year in the UK, there is significant potential for growth. Mondelez aims to expand its distribution network, which currently reaches nearly 2.5 million retail outlets.

Luca Zaramella, Chief Financial Officer of Mondelez International, underscored India’s strategic importance during a recent conference. “India is one of our most successful markets, showing tremendous growth across both entry-level and premium chocolate segments,” Zaramella said. He highlighted Mondelez’s focus on driving volume growth in high-potential markets like India, China, and Brazil, aiming for at least high single-digit, if not double-digit, growth rates.

As Mondelez navigates the challenges of inflation and rising costs, the combination of favourable monsoon conditions and a stable political environment in India offers a promising outlook for sustained growth and market expansion.

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The launch of HERSHEY’S Choco Delights addresses the burgeoning demand for distinctive snacking options at an affordable price point, particularly among Gen Z, Millennials, and value-conscious consumers in India.

Luigi Mirri, the general manager of Hershey India and APAC, expressed excitement about the launch, stating, “Hershey’s Choco Delights offers a unique blend of melt-in-mouth chocolate and delightful crunchies, delivering Hershey’s signature chocolatey experience at an accessible price point. This launch underscores our commitment to fortifying our chocolate portfolio in India and fostering innovation to engage a diverse consumer base. With this introduction, we aspire to carve a significant niche in the chocolate segment, catering to various consumption occasions for chocolate enthusiasts.”

This launch represents a strategic move for Hershey India as it expands its footprint in the chocolate segment, following the successful introduction of products like HERSHEY’S KISSES, HERSHEY’S Exotic Dark, HERSHEY’S Bars, and HERSHEY’S Choco Tubes.

HERSHEY’S Choco Delights is poised to captivate a broader audience in the confectionery market, particularly targeting metropolitan areas with populations exceeding one million. Consumers can indulge in the tempting offering of HERSHEY’S Choco Delights, available at retail outlets in top cities for just Rs 10, promising an affordable yet delightful chocolate experience.

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Amidst the surge in cocoa prices, major players in the chocolate and ice cream industries are facing tough decisions. Amul, considering the inevitable cost burden, plans to increase chocolate prices by 10–20% within the next two months. However, the company aims to keep ice cream prices unchanged, citing challenges in adjusting prices for seasonal products.

Baskin Robbins, grappling with a 70–80% surge in cocoa-based ingredient prices, opts to absorb the increased costs temporarily, with plans to reassess post-summer season. Similarly, Havmor Ice Cream, having already adjusted prices earlier in the year, strategically secures long-term pricing contracts to mitigate the impact of cocoa price hikes, aiming to maintain current price levels.

As cocoa prices continue to climb, industry leaders such as Amul, Baskin Robbins, and Havmor are faced with the delicate task of balancing profitability and consumer loyalty. Their decisions will likely shape pricing dynamics in the coming months, influencing consumer choices in the chocolate and ice cream markets.

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The unprecedented surge in cocoa prices, surpassing $10,000 per ton for the first time, has left companies facing significant challenges in cost management. With an estimated 8% decline in cocoa supply projected for the 2023–24 season, stemming from disruptions in major cocoa-producing regions like Cote d’Ivoire and Ghana, the situation looks dire.

Industry analysts warn of impending price hikes as companies struggle to maintain profitability amidst rising input costs. Some are contemplating strategies like reducing packaging sizes or exploring substitutes for cocoa butter approved by regulatory bodies. However, these measures may only offer temporary relief.

For bean-to-bar chocolate makers relying on fine-flavour cocoa, the scenario appears even more daunting. The diminishing price gap between fine-flavour cocoa and bulk cocoa, coupled with supply issues, threatens their pricing strategies and profitability.

In response, companies are exploring various avenues, from seeking cheaper alternatives to renegotiating contracts with suppliers. Yet, the overarching uncertainty surrounding cocoa prices continues to cast a shadow over the industry’s future.

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In collaboration with suppliers Cargill and Export Trading Group’s Beyond Beans, the global food and beverage giant will implement these projects over a five-year period. The initiatives aim to combat the impact of climate change on the cocoa industry by promoting agroforestry, accelerating the transition to regenerative agriculture, and supporting reforestation efforts in areas surrounding cocoa farming communities.

Combined, these initiatives are projected to reduce and eliminate over 500,000 metric tons of carbon emissions over a 20-year span, according to Nestlé. Each project will be supported by a comprehensive carbon monitoring and accounting framework to track progress effectively.

As part of these efforts, Nestlé plans to provide various multi-purpose shade trees to farmers, along with training on tree planting and pruning techniques. The introduction of shade trees is expected to mitigate the effects of sunlight on cocoa crops, improve moisture levels, aid water management, enhance biodiversity, and absorb carbon dioxide from the atmosphere.

The projects aim to plant more than two million shade trees across lands managed by nearly 20,000 farmers in Ghana and Côte d’Ivoire.

Nestlé, known for its diverse portfolio of over 2,000 brands, including popular chocolate and confectionery products like KitKat, Smarties, and Häagen-Dazs, is a major consumer of cocoa globally. The company procures approximately 414,000 tons of cocoa annually from various sources, including major exporters like Brazil, Ecuador, and Ghana.

Darrell High, Nestlé’s global cocoa manager, emphasized the importance of these initiatives in the company’s journey towards achieving net-zero emissions. He highlighted the need for collaboration with committed suppliers and local communities to ensure long-term forest protection and sustainable land-use practices.

Cargill’s partnership officer, Ursule Gatta, expressed the company’s commitment to expanding the project in collaboration with Nestlé to cover 18 cooperatives over the next five years.

Nestlé’s rigorous carbon monitoring and verification program will track tree planting activities and carbon sequestration, ensuring transparent and permanent carbon removal within its supply chain. The monitoring system will also assess the effectiveness of reforestation initiatives and their impact on the natural landscape.

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As Valentine’s Day approaches, chocolate lovers may soon notice changes in their favorite treats as cocoa supply issues persist, leading to higher costs for producers and potential alterations in product formulations.

A recent report by CoBank revealed that cocoa prices have reached a 46-year high, soaring approximately 65% in just a year. These elevated prices are expected to persist until the commencement of a new growth period later this year in West Africa, the main cocoa-growing region.

Matt Spooner, a leading figure at management firm Kinaxis, which assists cocoa producers in managing their supply chains, expressed concerns about the escalating challenges faced by the cocoa industry after three consecutive years of price hikes.

While consumers may not immediately feel the impact of these rising costs, as chocolates for the upcoming Easter season are likely already produced and in storage, the situation may change later in the year. Spooner anticipates price increases becoming evident by Thanksgiving and Christmas as producers are compelled to pass on the additional costs.

In response to the cocoa conundrum, producers may explore alternative strategies, including experimenting with new product formulations, sizes, or ingredients to mitigate price hikes. One potential tactic could involve reducing the size of chocolate bars to offset rising cocoa prices without significantly affecting consumer perception.

Major chocolate producers, such as Hershey, are grappling with these supply challenges and are making strategic decisions to navigate the situation. Hershey recently announced plans to streamline operations by cutting jobs, acknowledging that cocoa inflation will impact earnings this year. CEO Michele Buck hinted at the possibility of future price adjustments to counter rising costs.

The Conseil du Café-Cacao, an industry trade group in Ivory Coast, has already taken action by halting cocoa export contracts for the upcoming growing season due to lower-than-expected output during the previous harvest. This move has raised concerns about the stability of contracts between chocolate companies and growers amid uncertainty surrounding the upcoming growing season.

Spooner attributed the surge in cocoa prices to various factors, including diseases affecting cocoa harvests, climatic anomalies like the 2023 El Niño, which brought unprecedented rainfall to growing regions, and geopolitical tensions affecting the supply of essential inputs such as fertilizer.

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