Cocoa prices dropped. Chocolate prices didn't. Companies looked at their spreadsheets and decided the best way to win back customers was premium products and TikTok.
Not lower prices. Premium products.
The logic here is flawless. Your customers stopped buying because chocolate got too expensive during the cocoa spike. Now cocoa is cheaper. Do you pass those savings along? F*ck no. You launch a $12 artisanal bar with sea salt and make a thirty-second video about bean-to-bar sustainability. Maybe get an influencer to do an unboxing. Problem solved.
Poor weather hurt sales. Tariffs hurt sales. The Iran war hurt sales. You know what would help sales? Charging less money for chocolate. But that would require someone in the C-suite to admit they jacked prices up 40% when cocoa spiked and kept them there when it didn't. Can't have that conversation. Better to pivot to premiumization.
Retail traders saw this headline and immediately started scanning their portfolios for chocolate ETFs. They're convinced this is a buying opportunity. Cocoa's down, chocolate's still expensive, margins must be expanding. They'll discover that chocolate companies spent the margin expansion on Instagram ads featuring chocolate fondue waterfalls. But not before they're already in at the top.
The cocoa futures contract dropped 30% from its peak. Hershey looked at that data and said we should really focus on our social media presence. Mars nodded in agreement. Nestlé was already filming a behind-the-scenes documentary about their master chocolatiers in Switzerland who definitely exist and aren't just contract manufacturers in New Jersey.
Chocolate companies watched airlines perfect the art of never lowering prices even when fuel costs crater, and they took notes.
Photo by Sara Gomes on Unsplash
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