Rising cocoa prices drive candy makers to use less chocolate

Firms diversify with lower-cost options as they risk losing sales over more price hikes

When confectionery group Mars made a quiet tweak to its popular Galaxy chocolate bar in 2023, shaving 10g off the standard product size and repackaging the leaner treat without lowering the price, British shoppers were surprised, but cocoa traders were not.

The 113-year-old company, best known for its packaged sweets including Twix and M&M's, appeared to be taking a well-used page from the confectioners' playbook: When the cost of cocoa rises, they find ways to sell households smaller doses of chocolate - or, for some candy makers, new goodies with no chocolate at all.

Cocoa prices have climbed to record highs, and market participants do not expect any near-term relief.

Prices have skyrocketed as the world's biggest producers in West Africa grapple with drought and disease, as well as structural problems that could linger for years to come. Futures traded in New York averaged well below US$3,500 a tonne every year from the 1980s until 2023. On Feb 22, cocoa futures surpassed US$6,000 a tonne for the first time, and the market worries they could still have further to run.