The $10,000 Ton Question: How Chocolate's Crisis Creates Opportunity

Insights from the Future Food Tech panel on cocoa alternatives—and the reinvention of chocolate

Cocoa futures hovered at $10,000 per ton last week. That might sound like good news since this 'relief' represents a 25% decline from the year's peak of $12,646—until you realize that it still sits at 3-4x historical levels of $2-3,000 per ton. Welcome to the new normal of extreme volatility in one of the world's most beloved commodities.

As investors focused on food system transformation, we're watching a perfect storm create conditions ripe for technological disruption. The question isn't whether alternatives will emerge—it's which technologies will win, and how quickly they can scale.

Last week, I spoke on a panel at Future Food Tech "Chocolate in Crisis: Unlocking Solutions to Stabilize Supply" alongside Hershey, Celleste Bio, and Voyage Foods where we considered what emerging innovations are offering viable alternatives to cacao and chocolate as climate impacts, global tariffs, and crop disease disrupt supply.

The Numbers Don't Lie

The latest data from the International Cocoa Organization tells a sobering story. The 2023/24 growing season delivered a production deficit of 462,000 tonnes, with global stocks hitting a 45-year low. While the 2024/25 season shows improvement, we're still working through historically depleted inventories that leave the market vulnerable to any weather shock in West Africa.

In the wake of the cocoa deficit, chocolate manufacturers and confectionery businesses are utilizing compound chocolate and reducing cocoa content. Major chocolate supplier Blommer Chocolate shared that they are seeing "an uptick in compound coating sales as our customers struggle to hit price points required by retailers;" The compound chocolate market (which replaces expensive cocoa butter with cheaper vegetable oils) is growing at 6.3% CAGR through 2035, outpacing the growth of traditonal chocolate.

Translation: manufacturers are literally replacing real chocolate with substitutes to manage costs.

The Tariff Twist

Just as the industry was grappling with supply shortages, U.S. trade policy added another layer of complexity. American chocolate manufacturers now face a 10% baseline tariff on all cocoa imports, plus retaliatory tariffs reaching 21% on beans from Ivory Coast and 10% from Ghana—countries that represent 60% of global supply. Factor in the additional baseline tariffs of 10% on finished chocolate products, and this is no longer just about commodity prices. It's about supply chain resilience in an increasingly fragmented global trade environment.

Demographics Tell a Different Story

While manufacturers scramble with reformulations, consumer preferences are quietly shifting beneath them. The non-chocolate candy category grew 6.8% compared to chocolate's more modest gains of 4.1%. Gummies are projected to experience a whopping 20% annual growth globally.

Millennials alone increased their non-chocolate candy purchases by 9% year-over-year, indicating a broader generational shift in preference.

The takeaway? The chocolate market isn't just facing a supply crisis—it's experiencing a generational shift in preference that could reshape demand patterns for decades.

Enter Plant Cell Culture

This is where our investment thesis for companies like Cellese Bio crystallizes. Plant cell culture offers the ability to produce cocoa-identical compounds by cultivating actual cocoa plant cells in controlled bioreactor environments. And, plant cell culture is less costly than animal cell culture (from the growth media to the ease of culturing).

The economics could be compelling. Current production cost targets would provide a competitive advantage when traditional cocoa prices remain elevated above historical ranges. More importantly, the signaling of industry’s investment in alternative cocoa solutions (Mondelez, Cargill, and Meiji) signals possible industrial-scale validation—their R&D capabilities and distribution networks provide a pathway from lab to commercial production at the scale required for market impact.

Three Paths to 2030

During our panel discussion at Future Food Tech, moderated by Jess Spiring from Food Navigator and featuring Charlie Chappell from Hershey, Michal Beressi Golomb from Celleste Bio, and Adam Maxwell from Voyage Foods, we explored several critical questions: How do cocoa alternatives compare in taste and quality? What are the implications for price parity with traditional cacao? How willing are consumers to embrace alternative chocolate products?

Our conversation revealed possible scenarios for how larger companies might integrate alternatives into their chocolate offerings:

Scenario 1: Hybrid Integration: (Most Likely) Alternative cocoa ingredients capture a percentage of market share through blended products that maintain taste profiles while reducing supply chain risks. This gradual integration approach enables consumers to transition to new ingredients without compromising familiar experiences or price.

Scenario 2: Premium Bifurcation: Clear market segmentation emerges between "traditional" chocolate for premium and specialty applications, and "blended" chocolate for mainstream consumption.

Scenario 3: Localized Production: Indoor cultivation and plant cell culture facilities in major consumption markets handle regional demand, reducing 6,000-mile supply chains from West Africa. This distributed manufacturing model could reshape global trade patterns.

And these are not mutually exclusive scenarios - any of these could emerge, given the fundamental reshaping of the industry and its supply chain.

What This Means for Investors

The cocoa crisis illustrates how supply chain vulnerabilities, shifts in trade policy, and changing consumer preferences create opportunities for innovative food technologies. Smart investors and food companies are already placing their bets on technologies that can decouple chocolate production from geographic constraints while meeting the quality standards that consumers expect.

The companies that succeed won't just solve the supply problem—they'll anticipate the evolution of demand. As Gen Z consumers increasingly seek functional benefits and sustainability credentials in their food choices, alternative cocoa technologies that can deliver on taste, cost, and environmental impact will capture outsized market share.

Unlike alternative proteins, which require the development of entirely new supply chains and consumer categories, alternative cocoa technologies can leverage over 150 years of established chocolate manufacturing infrastructure and deeply ingrained consumer preferences. This creates a unique advantage: innovation can focus on ingredient substitution rather than market creation.

The Bottom Line

Cocoa prices may have retreated from their peaks, but the structural vulnerabilities remain. Climate change, political instability in producing regions, and evolving trade policies ensure that supply chain risks aren't going anywhere.

Smart investors and food companies are already placing their bets on technologies that can decouple chocolate production from geographic constraints while meeting the quality standards that consumers expect. The race isn't just to create alternatives—it's to scale them before the next crisis hits.

Because in food technology, as in venture capital, timing is everything. And for alternative cocoa, that time might just be now.