Hershey Reverts to Real Chocolate as Cocoa Prices Plunge 70%

Hershey, the U.S. confectioner, announced plans to revert to original recipes next year and move away from chocolate alternatives, following a near 70% slump in cocoa bean prices since 2024. The price decline makes traditional chocolate more profitable.

Details

Cocoa prices nearly tripled to record highs in late 2024 due to adverse weather and disease. In response, chocolate makers shrank bar sizes, added more wafers, fruit and nuts, and introduced chocolate alternatives with too little cocoa to qualify as chocolate.

Now, with prices falling, Hershey is pivoting back to traditional recipes. This shift is expected to lower shelf prices for consumers and boost demand for cocoa farmers in Ivory Coast and Ghana, where nearly 2 million farmers live in poverty.

Context

Industry experts expect other major brands to follow suit, but Mondelez (MDLZ), Ferrero, and Nestle have not commented. A leading cocoa expert said demand recovery should start in the second half of the year, but volumes may take a couple of years to return to pre-2024 levels.

What This Means for Investors

The return to real chocolate could boost sales and margins for major confectioners as input costs decline. Companies like Mondelez (MDLZ) and Hershey may benefit if cocoa prices remain low. However, long-term demand recovery remains uncertain.