Key takeaways:
- Chocolate manufacturers are accelerating investment in low- and no-cocoa alternatives as price volatility reshapes cost and risk strategies.
- Critics argue reformulation may steady margins but won’t address the structural underpayment and fragility at the heart of cocoa supply.
- Long-term resilience may depend less on reducing cocoa content and more on rethinking pricing, contracts and investment at origin.
Cocoa has become chocolate’s most unpredictable ingredient. Prices have lurched, crops in West Africa have struggled under extreme weather and disease, and long-simmering structural weaknesses have spilled into plain sight. For multinational manufacturers, the shock has been sharp and expensive.
So the industry is doing what it does best: it’s innovating.
Low-cocoa recipes, cocoa extenders and lab-developed substitutes are moving from concept to commercial reality. R&D teams talk about resilience. Procurement teams talk about exposure. Investors talk about de-risking. On paper, cutting reliance on a volatile commodity makes sense. But here’s the uncomfortable bit: reformulation doesn’t fix the pricing model that helped create the instability in the first place.
Amanda Archila, executive director of Fairtrade America, argues that the current pivot says as much about industry priorities as it does about climate risk. “The cocoa industry has long relied on paying cheap prices for cocoa that have kept hardworking farmers in poverty,” she says. “The biggest global chocolate companies have consistently pushed back against advocacy to pay farmers more, which could meaningfully address structural issues including climate resilience and persistent child labour. Yet at the same time, these same businesses have identified tens of millions in investments in cocoa alternatives. These choices speak for themselves.”
That tension – invest in ingredients or invest in origins – now sits at the heart of chocolate’s strategy debate.
Reformulating risk away
There’s no denying the pressure manufacturers are under. Ghana and Côte d’Ivoire, which together produce the majority of the world’s cocoa, have faced crop disease, erratic rainfall and structural productivity challenges. Futures markets have reflected that volatility in brutal fashion.
Against that backdrop, exploring alternatives looks prudent rather than ideological. Diversifying raw material exposure is standard risk management. For companies accountable to global shareholders, it’s hard to argue otherwise.
Archila doesn’t dismiss innovation outright. “Complex problems dealing with questions of sustainability and supply chain resilience require multi-faceted solutions, and there is certainly a place for considering the role of cocoa alternatives in addressing these issues,” she says.
But she’s wary of the way alternatives are sometimes framed. “We should be highly sceptical of sustainability assertions that 1) position these alternatives as silver bullet solutions; 2) fail to mention the impact on farmer livelihoods in their sustainability claims; and 3) rely on environmental claims that do not include the impact of their own technology usage or the likely use of land that may be transitioned away from cocoa production.”
In other words, lowering cocoa content doesn’t automatically equal higher sustainability. And shifting risk off a balance sheet doesn’t mean it disappears from the system.
For chocolate manufacturers, that distinction matters. ESG (Environmental, Social and Governance) scrutiny is intensifying, particularly in Europe and North America. Claims around climate, human rights and deforestation are increasingly interrogated by regulators, NGOs and consumers alike. If alternatives are marketed as a fix without addressing underlying sourcing economics, the reputational backlash could be swift.
The price of not paying
At the core of Archila’s argument is a blunt reality: cocoa’s fragility is closely tied to farmer income. “Every day, cocoa farmers face continued risk from the under-investment in sustainable livelihoods and climate adaptation,” she says. “Cocoa-growing communities are already some of the poorest and most marginalised in the world. Most cocoa farmers live on less than $1 per day, and many farming parents are often tragically left with no other option than to take their children out of school to work on their farms to make ends meet.”
For manufacturers, this isn’t just a moral question. It’s a commercial one. Farmers operating at subsistence level can’t easily replant ageing trees, invest in agroforestry or adopt climate-smart practices. When yields drop, supply tightens. When supply tightens, prices spike. The cycle repeats.
Yet raising farmgate prices or committing to long-term contracts increases short-term costs. Reformulation, by contrast, can look controllable and immediate.
Archila challenges that calculus. “The chocolate industry needs to ask itself some hard questions about its own motivations and incentives. If they had invested in farmers what they’re currently investing in alternatives, how much more resilient would cocoa production be? How much better equipped would farmers be to adapt to climate change and be able to better plan for their futures?”
She pushes further: “Is it simply too hard for the industry to pay farmers fairly so that they can invest in the kinds of initiatives that we know work to improve productivity?”
It’s not an argument against multi-pronged strategy. “Again, this is not to say that we don’t need multi-faceted solutions to these problems,” she says. “But it feels imperative that any investments in future-proofing product portfolios should consider investments in the farmers and countries that made this industry possible.”
Innovation versus responsibility
Some executives privately admit what’s rarely said publicly: cocoa risk is now viewed as structural, not cyclical. Climate models don’t suggest an easy return to historical norms. Political and regulatory pressures in consuming markets add another layer of complexity.
In that context, the temptation to reduce exposure is understandable. But Archila warns that stepping back from cocoa doesn’t dissolve responsibility.
“A move away from cocoa will certainly not resolve issues of poverty in these communities, and we have to be clear-eyed in assessing what the likely alternative sources of income will be for cocoa farming families and whether those are worse or better options for both people and planet.”
For major chocolate brands with high-profile sustainability commitments, that’s a strategic tightrope. Reformulation can’t quietly become a substitute for reform.
She also sees competitive opportunity for companies willing to lean in rather than step back. “People are fed up with companies choosing profit over people and planet,” she says. “Big chocolate’s continued reluctance to meaningfully commit to the communities they’ve done the bare minimum to support presents a real leadership opportunity for businesses that don’t see human rights, sustainability and supply chain resilience as mutually exclusive.”
There’s a commercial upside, too. “A growing segment of consumers are looking to spend their dollars on products that align with their values. Companies that demonstrate a people-and-planet-over-profit approach to business can win over those consumers and influence the broader industry to do better.”
For Archila, the starting point is simple. “For farmers who are unable to meet their basic needs, sustainability is often not a priority. They are focused on day-to-day survival.”
Her prescription is equally direct. “Companies that are serious about sustainability should prioritise fair payment to farmers and long-term contracts that allow them to access financing and make bigger, more impactful investments in their farms. Cocoa farmers are actively leading on work to improve productivity including agroforestry, farm renovation, enhanced pruning and training on good agricultural practices. Sustainability is a shared priority across the entire supply chain, and investing in farmers is a meaningful investment in the future of a food we all love.”
In a pointed response to the industry’s shift toward alternatives, she didn’t soften the message. “Companies that invest in cocoa alternatives instead of the people who grow cocoa are running away from the problems they created.”
For chocolate manufacturers facing intense cost pressure, that’s an uncomfortable charge. But it lands on a strategic truth: volatility isn’t just about weather. It’s about economics. Reducing cocoa content may steady the spreadsheet. Fixing cocoa pricing might steady the system. The industry now has to decide which problem it’s actually trying to solve.