The CEO of Mondelēz International, the company behind Cadbury, is optimistic that consumers will continue to indulge in chocolate despite rising cocoa prices leading to higher costs for the popular treat.
Chocolate manufacturers have raised prices significantly due to supply shortages caused by disease and adverse weather conditions. Mondelēz, the second-largest player in the $134 billion global chocolate market, raised chocolate prices by about 10% last year and anticipates a potential 50% increase in prices compared to normal levels.
Despite this, CEO Dirk Van De Put remains confident in consumers’ love for chocolate and the company’s strong brand portfolio, which includes popular names like Toblerone and Milka, to navigate through this period of volatility.
Van De Put expressed his belief in the enduring appeal of chocolate during the Consumer Analyst Group of New York’s annual event in Florida.
Chocolate accounts for approximately one-third of Mondelēz’s business, and despite the price hikes, sales have not been significantly impacted. The company reported $11.2 billion in revenue from its chocolate segment in 2024, led by brands like Milka and Cadbury.
To offset the elevated cocoa costs, Mondelēz plans further price increases in 2025. Additionally, the company has introduced additional packaging sizes for key brands in regions like Europe and India to offer consumers more choices based on their budgets.
In contrast, Hershey is exploring chocolate alternatives to mitigate the impact of cocoa price fluctuations on its earnings. The company has ramped up marketing and innovation efforts in its chocolate segment to adapt to the changing market conditions.
Despite the challenges, Mondelēz’s diverse chocolate brand portfolio and strategic pricing strategies provide it with a competitive edge. The company’s long-term cocoa purchasing agreements and varied packaging options contribute to its resilience in the market.
Van De Put emphasized Mondelēz’s commitment to emerging stronger from the current cocoa price fluctuations and advised consumers to adjust to the higher prices of chocolate as a new norm.
As chocolate remains an affordable luxury with strong brand loyalty, industry experts predict that the market will weather the storm and continue to attract consumers despite price increases.