Cocoa Market’s Rapid Reversal Stuns Snack Giant (Image Credits: Unsplash)
Chicago – Sharp drops in cocoa prices since the start of 2026 have introduced fresh challenges for Mondelez International as the company finalizes its plans for the year ahead.[1]
Cocoa Market’s Rapid Reversal Stuns Snack Giant
Cocoa prices tumbled 10% in the opening days of 2026 amid expectations of improved supply, extending to a 30% decline over the prior month and more than 50% below levels from a year earlier.[1] The commodity had soared past $12,000 per tonne late in 2024 before easing to about $6,000 by the close of 2025 and dipping further to roughly $4,000 recently.[1]
This swift shift caught industry leaders off guard, including Mondelez, which relies heavily on chocolate brands like Cadbury and Milka. Chairman and CEO Dirk Van de Put noted the surprise during a recent earnings call. “Suddenly the cocoa price has declined more than anybody would have expected,” he said.[1] Such volatility followed a 160% surge in 2024 that hammered profits across the sector in 2025.[2]
Mondelez reported full-year 2025 net revenues rose 5.8% to $38.5 billion, driven by 8% pricing gains, but volumes fell 3.7% as consumers pulled back.[2] Gross margins contracted sharply to 28.4% from 39.1%, reflecting record cocoa costs that peaked at $10.75 per kg in early 2025.[2]
Hedging Strategy Limits Immediate Relief
Prior hedging commitments locked Mondelez into higher cocoa costs for 2026, well above current spot prices. Chief financial officer Luca Zaramella explained that the company’s pipeline expenses remain elevated despite the downturn.[1]
“Our pipeline cost for ’26 is determined at this point in time, and it is clearly higher than current cocoa spot,” Zaramella stated.[1] This setup means product prices will stay largely unchanged from 2025 levels, with chocolate pricing expected to yield a slightly positive to neutral net of costs.
Executives emphasized agility in response to potential disruptions from annual customer negotiations. The firm anticipates no major pricing adjustments unless competitors force changes, as less-hedged rivals or private labels might pass savings to shoppers faster.[3]
Guarded Outlook Reflects Broader Pressures
Mondelez issued conservative fiscal 2026 guidance, forecasting organic net revenue growth of flat to 2% and adjusted earnings per share growth of flat to 5%.[1] These projections fall short of prior trends and account for cocoa uncertainty, soft consumer demand, and geopolitical risks.
North American volumes, particularly in biscuits, continued to weaken, while Europe faced intense pricing scrutiny.[2] The company plans increased brand investments to rebuild volume and loyalty.
- Organic net revenue: Flat to 2% growth
- Adjusted EPS: Flat to 5% growth
- Chocolate pricing net of cost: Slightly positive to neutral
- Key focus: Brand reinvestment and volume recovery
- 2027 outlook: Material margin expansion in chocolate
Longer-Term Optimism Amid Volatility
Van de Put highlighted brighter prospects beyond 2026, as lower cocoa levels align with historical norms. “Cocoa now has returned to a level that is much more in line with the historic price… that bodes very well for ’27,” he remarked.[1] Margins in the chocolate segment should rise considerably next year once hedges roll off.
Mondelez aims to navigate the transition through disciplined execution, cost savings, and diversification efforts. Consumers showed resilience despite price hikes, but sustained affordability will prove crucial.
Key Takeaways
- Cocoa’s plunge offers 2027 relief but pressures 2026 competitiveness.
- Hedged costs curb price cuts, prompting vigilance on rivals.
- Conservative guidance prioritizes flexibility and long-term growth.
The cocoa rollercoaster underscores the need for adaptability in global snacking – Mondelez positions itself for recovery, but 2026 tests its pricing playbook. What strategies would you prioritize in this market? Share your thoughts in the comments.
