Soaring raw material prices and growing sustainability pressures are forcing chocolate and confectionery companies to invest in finding alternative ingredients for sweet treats.
Oreo maker Mondelez International was one of the investors in cell-based cocoa startup Celleste Bio’s $4.5 million seed round earlier this month, while British food ingredients company Tate & Lyle) also announced a partnership with BioHarvest Sciences to develop sweeteners using synthetic plant-derived molecules.
The moves came as cocoa futures traded in New York climbed above $10,000 a ton, extending a dizzying rally that began a year ago. At its peak in April, the price of chocolate’s key ingredient exceeded $12,000 per ton, nearly three times higher than in January.
West African growers, who produce more than two-thirds of the world’s cocoa, face a double whammy of disease and harsh weather, driven by climate change, which is limiting production and exacerbating a global shortage of cocoa beans.
“If we don’t change the way we source cocoa, we won’t have chocolate anymore in twenty years,” said Michal Beressi Golomb, chief executive of Celleste Bio. She added that with cell-cultured cocoa, the industry “will no longer have to Depend on nature”.
Global shortages and record prices are driving a surge in interest and investment from chocolate and candy companies, Golomb said. “They are really worried about having a consistent, stable supply of high-quality cocoa,” she said. “Everyone wants to be part of the party.”
The Israeli company, founded in 2022, is one of a growing number of startups using cell culture technology to bypass the need for traditional farming methods that are vulnerable to climate change and market instability.
These innovations could also provide solutions to regulatory challenges, such as new EU deforestation regulations, which require proof that commodities such as cocoa are not grown on deforested land, further adding pressure on supply chains and prices.
Other groups are looking into how to make desserts with alternative, more easily sourced ingredients. Last year, Finnish confectionery maker Fazer launched a limited-edition cocoa-free “chocolate” made from local rye malt and coconut oil. The Helsinki-based company has also been growing cellular cocoa pods in collaboration with Finnish state-owned research center VTT since 2022.
“About four years ago, research told us that climate change would affect the supply and price of cocoa,” said Annika Porr of Fazer Confectionery’s cutting-edge laboratory. “This year it became a reality.”
Elsewhere, Cargill, the world’s largest produce trader, last year partnered with start-up Voyage Foods, which makes sustainable foods such as chocolate and nut butters without using traditional cocoa, peanuts and hazelnut ingredients. It does this by using grape seeds, sunflower protein powder, sugar, fat and natural flavors.
“When we started, prices weren’t in the news. Most Americans or Brits probably couldn’t point to where the cocoa comes from. Now, with prices rising, it’s easier for people to understand why this is necessary,” Voyage Foods CEO Adam Maxwell said.
Cargill added that consumers are looking for “more sustainable indulgences that taste great and are formulated without nut or dairy allergens.”
While the price of sugar – whose production is excluded from EU rules – has remained relatively stable, the industry is also facing increasing pressure to address its environmental footprint and meet consumer demand for healthier options.
Tate & Lyle, once a sugar producer now trying to become a sugar reduction company, is working with startup BioHarvest Sciences to develop synthetic sweeteners derived from plant cells.
BioHarvest Sciences has invested $100 million over the past 17 years to develop the technology, which extracts and amplifies key plant compounds that enhance sweetness while suppressing bitterness.
The partnership could help Tate & Lyle move away from ultra-processed foods, and the company has come under scrutiny from investors and scientists.
“Our customers and their consumers want products that are cost-effective and naturally derived,” said Abigail Storms, senior vice president at Tate & Lyle. The company sells products to packaged food companies such as McVitie’s biscuit maker Pladis.
While volatility in commodity markets may drive investment in alternatives, growing ingredients in a lab rather than in a tree or field isn’t cheap.
Golomb said Celleste Bio aims to achieve cocoa price parity with cocoa prices before 2024 (about $7,000 per ton for cocoa butter and $3,000 per ton for cocoa powder) by 2027 when it comes to market and scales up production.
Storms said Tate & Lyle also wanted to ensure that products made with its sweeteners were no more expensive than “full-calorie or full-sugar alternatives.” “It’s all about democratizing these benefits.”
Moving away from traditional commodities markets is also a battle with red tape and changing consumer expectations. For example, Fazer Group’s cocoa-free bars cannot be called “chocolate” but are instead labeled “candy chips” because EU rules reserve that name for products containing cocoa.
Ball said cell-based cocoa faces the same stringent regulatory maze, and approval of “novel foods” in the EU may be more difficult than in the United States.
Winning over consumers can be equally challenging. Preliminary research from Fazer Group suggests that transparency in how cellular cocoa is made may help sway public opinion, but taste and texture will be the ultimate test, Porr said. “Consumers really want it to taste and feel similar to traditional cocoa,” she said. “There’s still work to be done.”
