Shift in Chocolate Production

Due to high raw material costs, more food companies are considering using alternatives to cocoa butter in their chocolate-flavored treats. In response to the cocoa price surge this year, food manufacturers have downsized packaging and increased chocolate prices. Now, they are quickly rewriting recipes to avoid using cocoa butter entirely.

Market Adaptations

Manufacturers are launching new product lines and increasing volumes of non-cocoa products due to the rising prices of cocoa beans and growing demand for alternatives.

Aaron Buettner, President of Grocery at Bunge Global SA, noted that alternatives are approximately 40% cheaper. He stated, "Introducing these alternatives during a period of prolonged food price inflation can help keep sweets affordable."

Industry Strategy

Companies generally do not publicize substitutions for popular ingredients. Suppliers are initially substituting cocoa butter in secondary products like coatings and sprinkles. These reformulated treats may be labeled as "chocolate" or "chocolate-flavored coating."

Swedish company AAK reported a 14% increase in volume in its chocolate and confectionery fats segment last quarter. This division produces ingredients designed to complement or completely replace cocoa butter.

Expanding Product Lines

Other companies are also expanding their presence in this area. Last year, Bunge launched two new cocoa butter substitutes, one based on shea butter equivalent and the other aimed at matching the texture and taste of 61% dark chocolate. These products were initially launched for Asian and Middle Eastern markets but could eventually be rolled out globally.

"Shea is a cost-effective, economical substitute for cocoa butter, and it's becoming increasingly attractive to industry players," Buettner said. As a vegetable oil, shea butter can be used in a range of products, from baked goods and pastry fillings to nut and seed butters.

New Product Launches

Last month, Chicago-based Blommer Chocolate Co. launched a new product line based on cocoa butter equivalents, promising an "incredible chocolate-like experience." Jenna Derhammer, the company's Corporate R&D and Innovation Manager, mentioned that sunflower and palm oils could save customers 20% or more.

Rising Interest in Alternatives

Interest in cocoa butter alternatives has surged following the increase in cocoa prices. Futures contracts hit an all-time intraday high of $11,722 per metric ton in New York in April, following shortages among leading West African producers. Although cocoa bean prices have since dropped, they are unlikely to return to levels below $3,500 per metric ton, which was the average until last year.

Future Outlook

Cocoa production in West Africa is expected to recover next season due to improving weather conditions. However, concerns remain about structural issues like disease that could continue to impact crops and keep cocoa prices high for longer.

Earlier reports indicated that increased cocoa production in the 2024/2025 farming season would address the cocoa shortage issue. Production is expected to exceed demand by 300,000 tons next season. If this forecast holds, it would be the first time in three years that supply surpasses demand.

The shift towards cocoa butter alternatives reflects the food industry's need to adapt to rising raw material costs and maintain affordability for consumers. As companies navigate these changes, the ability to innovate and diversify ingredients will be crucial for sustaining market competitiveness and meeting consumer demand.