Cocoa beans’ history traces back to over 5,000 years ago and connects Africa, Europe, and the Arab world with the Americas, being cultivated in Central and South America primarily. It was after the end of the 16th-century Spanish conquest that these vitamin-filled beans made their way to Spain, the point when they started spreading across Europe as a first-class good consumed initially in liquid form.
Europe introduced cocoa to the Middle Eastern markets around 450 years ago via trading posts and colonies throughout Asia and Africa, which helped push cocoa into the mainstream. Key Mediterranean trade markets like Istanbul and Beirut became entry points for cocoa into the Middle Eastern markets thanks to their continental connections. Saudi Arabia emerged as the region’s heaviest market for confectionery and keeps challenging what people understand through chocolate varieties, introducing new flavours, textures, and production techniques.
Fast forward to today, and the cocoa market waters are anything but calm. The industry has witnessed tremendous shifts triggered by altering consumer tastes, tech developments, rising sustainability focus, and economic uncertainty. The taxes imposed by the U.S. on over 60 countries are a primary factor determining the faith in cocoa, and since the final announcement was made public on the 2nd of April, the impact on cocoa is in the course of taking shape. Consumption and production patterns are monitored closely, and the latest data reveals that the cocoa price crash in European markets can steal the competitive advantage of U.S. chocolate makers, an edge that has been in freefall for the past weeks. Some producers’ losses are other producers’ gains – which is why we’re delving deeper into the phenomenon to gain a better understanding of future trends and consumption patterns.
London cocoa futures are far behind NY prices
London cocoa futures established for this year’s fifth month’s delivery are lower by $500 per ton compared to the New York futures. For context, London’s May contract saw a decline of up to 4.9%, while the New York cocoa rates spiked by up to 5.7%. This cocoa price crash triggered by U.S. tariffs could hit U.S. chocolatiers really hard, who might find themselves struggling to find the most affordable supplies. U.S. chocolate makers have already fought to stay afloat as a supply shortage of last December pushed cocoa futures to new records. The costs will most likely be passed on to buyers, many of whom will possibly skimp, rationalize consumption, buy less, or compromise on their goods’ quality.
Many companies will have to reduce the quality of their ingredients to keep up with expenses through means like slashing cocoa content or cranking up the amount of artificial or natural flavours and different extracts. On the other hand, the fact that chocolatiers in regions with more favourable economics needn’t cut the quality or quantity of their cocoa ingredients that much (or, at all) steals advantage from the U.S. chocolate makers. Experts foresee the market’s competitiveness dropping in light of decreasing demand for U.S. chocolate and increasing difficulty in maintaining a quality level. The market is expected to lose competitiveness as demand for American chocolate weakens and maintaining quality becomes tougher. The cocoa bean market isn’t the only exception in upheaval – the past years saw various processing factories close. Now, the U.S. relies on Malaysia and Indonesia for cocoa butter imports, which saw tariffs of 24% and 32%.
A blessing in disguise?
The U.S. may risk its standing in the global chocolate market, but this might not be entirely bad. The tariffs might translate to lower numbers of imports from Europe into the U.S., thus giving nation-based factories a larger share of the market to sell their products. Nevertheless, various factors affect this scenario’s probability, including a potential European retaliation that could deal a blow to U.S. exporters conducting business in Europe.
The key regions of the cocoa market in Europe include Spain, France, Italy, Germany, and Great Britain. On the other hand, North America’s market stands out through the U.S., Mexico, and Canada. South America’s market thrives through Argentina and Brazil, while the Middle East relies on Saudi Arabia and the UAE for success.
The trends that lead
Ordinary/bulk cocoa has generally enjoyed a weighty market share thanks to its variety and aromatic characteristics—a trend that continues in force. Additionally, developments in confectionery and chocolate industry, alongside sustainability ambitions, impact the increase of ordinary/bulk cocoa types and products’ influence.
Fine flavours also rise to the top thanks to the spiking demand for artisanal and gourmet chocolates. These include various, often unconventional, assortments, from salted pistachio to hibiscus raspberry to lavender, and even sushi or pancakes. Although offbeat, such unique combinations can only make the grade if they produce source materials like cocoa butter, powder, liquor, and so on, from trusted suppliers like OFI. High-quality, flavour-rich products are the foundation of any successful producer, be they making bakery, confectionery, desserts, dairy, or even snacks. This is largely valid for companies regardless of their location of production and target market – with varieties depending on social, cultural, and economic differences.
The desire for healthy cocoa products remains.
Shrinkflation and skimpflation are pressing concerns for the U.S. chocolatiers, who find themselves forced to reduce product sizes, slash cocoa contents, shift to more affordable material suppliers, and so on. Layoffs aren’t excluded, too, despite the obvious aftermaths that could arise. However, most consumers realize the dire situation and the reasons why their favourite chocolate is cranking up in price or becoming harder to find.
And here, two main categories of buyers emerge – those who’ll shift to more affordable products or those who’ll stick with quality and find their way around the situation. Gen Z, followed by Alpha, favour quality over quantity and look for sustainably made products that provide vitamins, antioxidants, and nutrients—as real cocoa does. Chocolate is healthy for a number of reasons, including boosting blood flow, brain function, skin health, and overall cognitive function. Many aren’t ready to kiss these perks goodbye, meaning that chocolatiers who’ll go the extra length to provide these benefits via their products stand a better chance of surviving.
