The cocoa industry experienced a massive shift in 2024 on a global level, driven by multiple factors, such as declining production, supply shortages, and sustainability considerations. Cocoa prices have risen to around $12,000 per metric ton in December, accounting for almost a triple increase from a year ago. This dramatic increase in cocoa prices has left a mark on the industry, and according to analysts, consumers will likely see a much steeper rise throughout 2025, reaching over 10% – an unprecedented level of inflation in the recent history of cocoa products.
With a number of factors, such as price fluctuations and climate change, continuing to impact the cocoa sector, the cocoa sector is clearly reaching a bittersweet turning point. In order to mitigate the pressing challenges, it is paramount to find viable solutions to ensure an ethical and prosperous cocoa ecosystem.
Climate change remains a significant threat to the cocoa industry
Extreme weather conditions will keep threatening cocoa yield across the globe. Last year, West African countries such as Côte d’Ivoire and Ghana saw massive drops in production volume, mainly because of the disease outbreaks exacerbated by shifting weather patterns. Given that climate conditions aren’t expected to improve in 2025, this trend is expected to persist, with cocoa farmers facing declining productivity as their traditional methods will no longer be enough to withstand unpredictable weather changes. A potential solution to this could be regenerative farming practices, like cover cropping or agroforestry; however, they require substantial investment as well as training, meaning that they may not be easy to implement (at least not fully) during 2025.
It’s no secret that cocoa farming has been linked with deforestation in West Africa, so in response to this, governments and global buyers are advocating for stricter measures. While in 2024, a few initiatives were implemented to reduce forest degradation, this year, the focus will be on enforcing these initiatives to ensure they have a meaningful impact. Companies will be required to comply with deforestation-free certification standards, like those proposed by the EUDR, initially scheduled for January 1, 2025, but were delayed because of concerns of improper preparation among supply chain stakeholders. For medium and large enterprises, the deadline for compliance is January 1, 2026, while small and micro enterprises must meet the requirements until June 20, 2026.
Economic pressures continue to strain the valuation of cocoa in 2025
The cocoa sector has become very vulnerable to price fluctuations in recent years, and 2024 was record-setting to this end, as the prices reached new highs because of supply shortages, inflation, and other disruptions in the supply chain. During this year, declining production, inflationary pressures, and economic uncertainties could continue to impact the valuation of cocoa while also making it difficult for farmers to achieve financial stability.
Some solutions to these challenges include direct trade models, fair trade initiatives, and government interventions in the top producer countries in West Africa. This year, consumer pressure for ethically sourced cocoa is also expected to rise, urging enterprises to provide better working conditions and fair wages to farmers. Meanwhile, Asia is seeing increasing cocoa consumption, which will likely reshape the supply and pricing dynamics of the market, shifting cocoa exports from West Africa to Asia.
Child labor and ethical concerns demand scrutiny of the supply chain
Child labor is still a persistent issue in the cocoa sector, especially in West Africa. Although efforts were made to tackle this issue, estimates indicate that more than 1.5 million children still engage in hazardous cocoa farming activities.
Stricter regulations will likely pressure enterprises to improve accountability and transparency in their supply chains throughout the year, and showcase the measures they take, such as getting cocoa from a reliable supplier like ofi. Moreover, third-party audits and blockchain will potentially become essential tools for ensuring compliance with labor standards, and programs such as the CLMRS (Child Labor Monitoring and Remediation System) will be at the top of sustainability initiatives, focusing on the education of children and raising awareness among farmers.
Shifting consumer preferences are reshaping the industry, requiring cocoa companies to adapt
The cocoa market faces challenges due to consumers’ changing needs and preferences. In 2024, the prioritization of sustainability and ethically sourced cocoa ingredients improved considerably, with this growing trend favoring brands that align with these values. This year, there will be a rising demand for sugar-free chocolate and similar healthier products, indicating a shift toward health-conscious consumer habits.
Compromising on quality will not be an option for companies, but at the same time, consumers’ requirements for plant-based chocolate go beyond taste, as they choose this alternative for health and environmental reasons as well. Hence, they should be made with nutritious and sustainable ingredients. Hence, companies must consider the preferences of customers and ensure their sweet products meet the changing demands by reducing the sugar content of the products, incorporating healthy fats like those from hazelnuts, walnuts, or seeds, and expanding their portfolios to meet specific dietary needs, like nut-free, gluten-free, or dairy-free.
Conclusion
The cocoa sector is expected to navigate challenges and opportunities throughout this year, with key trends emphasizing sustainability, greater tech adoption, price fluctuations, and changing consumer preferences. Creating a balance between economic viability, environmental conservation, and social equity requires the participation of all stakeholders; otherwise, the cocoa sector will continue to experience the same crisis as it did in 2024. The future of the cocoa industry ultimately depends on whether it can adapt to the environmental, economic, and social landscapes that are always evolving, and while there are many pressing challenges, innovative solutions are also emerging.
For 2025 to be a catalyst for good in the cocoa sector, it’s essential to prioritize equitable farmer compensation, sustainable practices, and innovative technologies, such as cultivating cacao plant cells in controlled environments to no longer rely on traditional farming methods. One thing is clear: the cocoa sector needs positive transformation more than ever, so action must be taken to remediate the current issues and create a better future for cocoa farmers, consumers, and producers worldwide.
