Bloomberg: Global Demand Decline Hits Cocoa Industry

The global cocoa industry is facing mounting pressure as demand for chocolate continues to decline, following the record surge in prices seen a year ago, according to analysts cited by Bloomberg.

Data compiled by Bloomberg from 11 analysts and traders indicate that cocoa bean grinding volumes in Europe, the world’s largest consumption region, are likely to fall by around 3% in the final quarter of 2025 compared with the same period a year earlier, reaching their lowest level in 11 years.

Grinding activity in Asia is also expected to drop to its lowest level in a decade, while North America may see only a slight increase, according to Bloomberg estimates.

Cocoa futures prices hit record highs in December 2024 due to poor harvests in West Africa. 

The surge forced consumers to cut back on chocolate consumption and pushed confectionery companies to reformulate products by using cheaper substitutes and increasing fillings such as nuts.

Although prices have fallen by more than half since their peak, they remain historically high. 

At the same time, manufacturers are still processing inventories purchased at elevated prices.

Analysts believe that weak demand driven by higher costs outweighs any positive seasonal factors, particularly in Asian markets, where passing on price increases to consumers has proven difficult.

Meanwhile, declining demand and recipe reformulations have led to lower cocoa butter prices, the most profitable product for cocoa grinders.

Data show that cocoa processing margins in Europe fell below breakeven in August, before hitting record lows in December. 

Such levels typically prompt factories to cut investment and reduce operating rates.

Jonathan Parkman, Head of Agricultural Sales at commodity brokerage Marex Group in London, said that falling capacity utilization at major processing hubs is further squeezing profitability.

He added that global cocoa grinding is expected to decline by about 5%, pointing to significant excess capacity worldwide, not due to a production boom, but rather to a sharp drop in end demand and changes in chocolate manufacturing formulas.

Cocoa grinding data for the three main regions are expected to be released later this week, with forecasts pointing to only modest growth in North America.