Nestlé’s recent reformulation of its Toffee Crisp and Blue Riband bars means it can no longer, legally, call them “chocolate” anymore, portending a bleak future for the chocolate candy industry.
Government data shows that, in the U.S., chocolate confectionery products and cacao bean prices were up 27.5% year-over-year in September for producers. In the near future, more CPGs will likely have to rethink their product strategies to contend with these higher prices, either by reformulating, innovating, or upping the price.
Already, many chocolatiers and confectionery makers have tweaked their pricing. Data from Circana found that the average price per unit is up 7.6% year-over-year as of December 1; the average price sits at $3.74. Consequently, 1.5% fewer retailers are stocking chocolate products, harming overall unit sales, which fell 0.8% over the period.
Nevertheless, consumers seem particularly resilient in the vertical, as dollar sales spiked 6.7% despite these headwinds.
Nestlé’s strategy to reformulate chocolate offerings in the face of this difficult market affected its shelf presentation. The brand noted that higher inputs necessitated action beyond repricing.
According to U.K. law, a product needs to have at least 20% cocoa solids and 20% milk solids. Once Nestlé incorporated a larger amount of cheaper vegetable fat, it fell below the threshold, reported the BBC. As a result, the product packaging now reads “encased in a smooth milk chocolate flavour coating” in lieu of explicitly calling them chocolate.
The CPG giant assured that the formulas were “carefully developed and sensory tested.” At this time, they do not anticipate further reformulations.
Earlier this year, Nestlé had to drop the word “chocolate” from their white chocolate Kit Kats in the U.K. after cocoa butter levels dropped below the country’s legal minimum.
Geopolitical tensions pressuring the cacao supply chain, and inclement weather and crop diseases in key growing regions have brought the chocolate industry to this point, and it is unlikely to turn around on its own any time soon.
Chocolate X-Ing: An Industry at a Crossroads
To reckon with higher inputs, makers are turning to unique solutions, with varying consumer reactions.
In May, Hershey’s said on an earnings call that it was working to adjust its “price pack architecture,” likely to participate in “shrinkflation” – the act of reducing the amount of product in the package.
Similar reports from brands including Nestlé, Toblerone, and Mars have also been observed both in the U.S. and in Europe. The strategy helps prevent dreaded price increases, but consumers can find the practice misleading without proper communication.
To avoid both price increases and unit size shrinkage, many leading brands are turning to R&D to find more sustainable solutions. For example, Cargill launched NextCoa in 2024 to offer a cocoa-free chocolate alternative that boasts sustainability claims and a lower price point. Additionally, Lindt & Sprüngli, Mars, and Mondelēz are all looking into lab-grown and science-based solutions to cocoa and manufacturing.
Mars, for example, is working with research universities to leverage CRISPR gene editing technology for applications in cacao, peanut, maize, and mint production. The hope is to genetically modify these crops to make them climate- and disease-resistant, nutrient-efficient, and sustainable.
“For the food industry, CRISPR techniques can contribute to consumer-facing flavor and nutrition characteristics as well as help to secure crucial upstream agricultural resilience,” Dr. Sarah Garland, PhD in Plant Sciences and founder of Triple Helix, told FI in a feature about the innovation.
Food for Thought Leadership
In this episode of Food for Thought Leadership, Food Institute VP of content and client relationships Chris Campbell sits down with Barry Thomas, senior thought leader at Kantar, to unpack the rapid rise of agentic AI — a new class of AI systems that don’t just generate information but take action on behalf of the user.
