Mondelēz International and Hershey are bracing for significant financial pressure as cocoa prices continue their prolonged surge, impacting their earnings and market strategies throughout 2025.
Mondelēz CEO Dirk Van de Put emphasized that the company is facing “unprecedented cocoa cost inflation,” which is expected to reduce its adjusted earnings per share by approximately 10% this year. The Oreo and Toblerone maker is considering potential price hikes later in 2025 or into 2026 if costs remain elevated. Despite these challenges, Van de Put noted that consumer demand for chocolate remains strong, as it remains a key indulgence.
Mondelēz is focusing on maintaining category health, market share, and brand investments amid ongoing volatility. While acknowledging that cocoa prices are at historic highs, Van de Put expressed confidence that they will eventually decline.
Cocoa prices have more than doubled since the end of 2023, driven by supply constraints caused by adverse weather, plant diseases, and increased global demand. According to Bloomberg, this sustained increase has posed significant challenges for confectionery manufacturers.
The National Confectioners Association reported that chocolate sales hit a record $21.4 billion in the past year, with 65% of consumers regularly indulging in the confection.
Hershey CEO Michele Buck, who plans to step down in 2026, stated that the continued surge in cocoa prices will place substantial pressure on the company’s earnings for 2025. However, she remains optimistic about the cocoa supply, noting that nearly half of Hershey’s cocoa production now comes from regions outside of Ivory Coast and Ghana. The company has also made strategic investments in West Africa and diversified its supply sources to mitigate risks.
Buck acknowledged a disconnect between market fundamentals and cocoa pricing trends but emphasized that Hershey is monitoring potential alternatives, including lab-grown cocoa. While cocoa substitutes are being explored, the company remains committed to preserving brand integrity and product quality.
Industry analysts believe that Hershey and other major players will eventually absorb the financial impact of rising cocoa prices. Edward Jones analyst Brittany Quatrochi noted that while increased costs will temporarily slow Hershey’s earnings growth, the company’s strong management and long-term strategy position it for continued success.
In response to these challenges, chocolate manufacturers, including Mondelēz, Hershey, and Nestlé, have invested millions into improving cocoa farming practices and increasing output in key regions. Interest in lab-grown cocoa is also on the rise. Mondelēz’s venture capital arm, SnackFutures Ventures, recently participated in a $4.5 million funding round for Celleste Bio, a company specializing in cell-cultured cocoa ingredients.
Buck noted that cellular agriculture is an emerging technology receiving substantial investment, describing it as a potential “game changer” for the industry in the long term.
As cocoa prices remain high, chocolate companies must navigate an evolving landscape, balancing cost pressures with consumer demand and innovation.