Key takeaways:
- Climate change and conflicts like the war in Ukraine are exposing just how fragile wheat and other staple supply chains have become.
- Manufacturers are diversifying with regenerative farming and heritage grains to build resilience against future shocks.
- Cocoa sustainability programs such as Mondelez’s Cocoa Life are critical to tackling deforestation, child labor and long-term supply risks.
Beneath the pull of flavor, convenience and price, it’s sustainability, climate change and the demand for cleaner supply chains that are now steering the industry.
On one side, volatility from climate change and geopolitical instability has exposed vulnerabilities within traditional supply chains for manufacturers, creating challenges such as commodity shortages, price volatility and reputational risks. On the other, consumers increasingly want to know where their food originates and how its production impacts the environment, local economies and their own health.
Few sectors are as tied to agricultural commodities as bakery and snacks. Two crops, wheat and cocoa, illustrate both the challenges and opportunities in ingredient sourcing and how it has become central not only to brand reputation but also to the sector’s long-term survival.
As the founding ingredient of bread, pastries and savory snacks, wheat faces mounting pressures. The Intergovernmental Panel on Climate Change (IPCC) warns that heat stress, droughts and floods will reduce productivity of staple crops, including wheat and maize, by mid-century. Global yields of wheat are around 10% lower now than they would have been without the influence of climate change, according to a recent study.
Wheat under pressure
And in the here and now, the ongoing war in Ukraine started out by disrupting global wheat and sunflower oil markets, sending ripple effects across bakery shelves worldwide. Trade disputes, export bans and rising fuel costs further strain supply chains.
For brands in the sector, the path forward has to lie in embracing sustainable and innovative crops and investing in regenerative supply chains. One of the first companies to commit to accelerating a farmer-led movement (starting in 2019), General Mills is halfway to its goal of accelerating the adoption of regenerative agriculture on 1 million acres of farmland by 2030 through pilots in the Northern Plains (oats) and Kansas (wheat).
There’s still a way to go; the company’s latest ESG report concedes that 1 million acres is around 30% of the amount of land needed to grow the volumes of the crops they buy, or feed to animals, for producing key ingredients like grains and dairy.
Mary Jane Melendez, the company’s chief sustainability and global impact officer, emphasizes the gravity of General Mills’ relationship with nature. “We are a company that depends completely on the health and wellbeing of Mother Nature … she is our most important supplier. And if we don’t act … we will not be in business for another 155 years.”
While the risks are clear, so too are the opportunities. Manufacturers are recognizing that diversifying their ingredient base and working closely with suppliers can protect them against sudden shocks. Cereals like spelt, einkorn and emmer, and pseudocereals like quinoa and amaranth, are increasingly incorporated into functional foods such as wholegrain breads, cereals and snack products.
Unlike mainstream grains, heritage and ancient grains are often more resilient and adaptable to varying weather conditions, but the challenge for bakers is these grains often have lower yields and different protein content, so a flexible production process is required.
In 2023, Gail’s, a 170-outlet UK bakery chain, initiated Wheat Project, a partnership created between baker, miller and farmer to create positive change in the growing, processing and baking of grain. Out of this evolved on-the-shelf favorites like Good Earth Sourdough, made with a blend of wholemeal wheat, barley, emmer, spelt and rye.
The cocoa challenge
Cocoa faces a slightly different set of sustainability concerns, linked to deforestation and child labor as well as climate change. Leading cocoa brands have pledged to source 100% sustainable cocoa through programs like Mondelez International’s Cocoa Life. Aided by $1 billion of investment from 2012–2030, Cocoa Life supports 208,000 farmers across eight countries.
According to the firm’s chief impact & sustainability officer, Christine Montenegro McGrath, about 91% of the cocoa volume used in their chocolate brands was sourced through the program last year. This year, the aim is 100%.
McGrath says: “Despite immense challenges facing the cocoa sector, in 2024 we continued to advance our leadership in more sustainable sourcing of critical ingredients … I’m proud of the consistency of our approach and the strong progress we continue to achieve against our sustainability goals.”
Bold sourcing commitments like Cocoa Life, or regenerative acreage targets like the General Mills approach, serve as trust signals, boosting brand credibility with eco- and health-conscious consumers. Products boasting heritage grains or sustainable origins increasingly catch the eye, offering both differentiation and alignment with changing customer values.
The question is no longer whether ingredient sourcing shapes the sector, but how quickly brands can adapt to this new reality.
