The chocolate industry has a supply problem

Somewhere, Willy Wonka is crying – because the global chocolate river is starting to run dry. This sadness could be short-lived, however, as the industry is hard at work searching for a golden ticket to help it keep up with global demand.

Background: The price of cocoa, a key ingredient in chocolate, has been marching upward for over two years, and more than doubled over the past year.

This is largely due to a lack of supply. ~70% of the world's cocoa beans come from four West African countries – Ivory Coast, Ghana, Nigeria, and Cameroon – and these locations are dealing with weather issues and pests that have negatively affected output. This year marks the fourth straight season of poor cocoa harvests.

Scientists and entrepreneurs are chasing ways to combat this supply instability. One way? “Cocoa-free” chocolate. Multiple companies playing in this space have secured funding from investors over the past few quarters.

• California-based startup Voyage Foods, which has raised ~$65 million to date, makes cocoa-free chocolate designed to mimic the taste of traditional chocolate. The company currently sells chips and wafers – which feature vegetable oil, sugar, and grape seeds as the top three ingredients – that can be used in lieu of chocolate while baking, for instance.
• Germany-based startup Planet A Foods (~$43 million in funding) is convinced the taste of chocolate has more to do with the fermentation and roasting process, and less to do with having cocoa as the main ingredient. The company’s chocolate substitute, ChoViva, is instead made from ingredients like oats and sunflower seeds.

Lab-grown chocolate startups are also gaining traction… California Cultured, another startup in the space, is working on technology that would enable chocolate to be made in a lab with “identical characteristics to any cup of coffee or chocolate bar you will find at the store, down to the last molecule.”

…as are more natural ways of boosting supply. Mars, maker of M&Ms and Snickers, helps operate a research facility at UC Davis aiming to make cocoa plants more resilient to pests and changes in weather.

👀 Looking ahead: The chocolate-supply chain definitely needs a Mario mushroom-boost, because demand is only going up. The global chocolate confectionery market was valued at ~$239 billion last year, and is expected to reach ~$316 billion in 2028, according to data from Statista.