Fake chocolate is a sweeter bet than plant burgers

Reuters

28-03-2025

TORONTO, March 28 (Reuters Breakingviews) - Eco-conscious diners weren't enough to propel once-hyped startups like Beyond Meat (BYND.O), opens new tab into reshaping the food chain. The problem for plant-based burgers is that they weren't clearly a better option on price or taste, and threatened an established market of farmers and meatpackers. When it comes to edible lab experiments, a sweet tooth works better: artificial chocolate offers a remedy for the $130 billion confectionery industry's recent bitter harvest.
Disease and bad weather hurt cocoa production in Ivory Coast and Ghana, which are responsible for 60% of global supply. Prices of cocoa futures quadrupled in 2024 from the prior year, while production has trailed demand for three years in a row. Jefferies analysts in January estimated this shortfall would persist until 2028. But the International Cocoa Organization now forecasts, opens new tab a surplus of 142,000 tons in the current season. That extreme volatility can be a problem for chocolatiers.
After all, to guard against cocoa's swings, confectioners like $35 billion Reese's manufacturer Hershey (HSY.N), opens new tab hedge using financial instruments like futures. Recent volatility drove wrong-footed speculators to exit the market. A Hershey executive told Reuters that futures pricing is now effectively broken, and the company warns in filings that an inability to offset cost increases is a risk to results.
One way to ease the pain is to raise prices on Kisses and Kit Kats. Lindt & Sprüngli (LISN.S), opens new tab, which makes premium chocolate, has repeatedly done so. But Hershey produces cheap treats – 80% of its portfolio retails at less than $4 – and doesn't 'expect pricing to be easy,' finance chief Steve Voskuil said in February. Its gross margin is expected to fall nearly 10 percentage points over the next three years versus the previous five-year average, according to LSEG data.
A more promising solution: ditch the cocoa. Candy makers are already using more palm oil and substituting shea butter in place of cocoa butter. Lindt is going further, backing an upstart that grows cocoa in a lab, opens new tab with just a few cells, though that's a ways from commercialization. Mondelez International (MDLZ.O), opens new tab has made similar investments. Voyage Foods and Germany's Planet A Foods, opens new tab raised $94 million and $30 million respectively to pursue 'precision fermentation,' a method to recreate chocolate flavor with oats and sunflower seeds.
It might seem an implausible bet, given that lab-grown and plant-based meat have struggled to reach scale or crack the burger market – Beyond Meat shares have fallen 95% since its 2019 listing. But the economic need here is greater, and incumbents are on board given they're attacking a $13.5 billion opportunity, opens new tab. However it happens, the cocoa bean might just be disrupted.
New York cocoa on March 28 rose 1.2% to $8,077 a ton and was on track for a weekly gain of 4%.