Global Cocoa Prices Slide, But Chocolate Demand Remains Weak
Global cocoa processing activity remained weak in the final quarter of 2025, underscoring continued demand pressure across the chocolate industry despite a significant retreat in cocoa prices from last year’s record highs.
Cocoa bean grindings, which measure the volume of beans processed into cocoa butter and powder for chocolate and confectionery products, declined across most major consuming regions. Europe, the world’s largest cocoa-processing market, likely saw fourth-quarter grindings fall by approximately 2.9 percent compared with the same period a year earlier. This would mark the lowest fourth-quarter processing level in more than a decade. Asia recorded the sharpest contraction, with grindings estimated to be down around 12 percent year on year, potentially reaching a ten-year low. North America was the only region to register modest growth, with processing volumes rising by about 1.2 percent, supported in part by the addition of new processing facilities.
Estimated Year-on-Year Change in Fourth-Quarter Cocoa Grindings
| Region | Fourth-quarter grindings |
|---|---|
| Europe | -2.9% |
| Asia | -12% |
| North America | +1.2% |
The slowdown reflects lingering demand destruction caused by the unprecedented surge in cocoa prices during 2024. Futures prices climbed to all-time highs in December of that year after consecutive poor harvests in West Africa disrupted global supply. The resulting price shock forced consumers to cut back on discretionary chocolate purchases, while manufacturers responded by reformulating products, reducing cocoa content, and increasing the use of alternative ingredients and fillers.
Although cocoa futures have since fallen by more than half from their peak levels, prices remain well above historical averages. Many processors are still working through inventories that were purchased when prices were significantly higher, limiting the immediate benefit of cheaper beans and discouraging increases in processing activity. As a result, the recent price decline has yet to meaningfully filter through to chocolate manufacturers or retail shelves.
Market analysts note that seasonal demand typically supports cocoa grindings in the fourth quarter, but elevated costs and weak consumer sentiment appear to have outweighed this effect. Asia has been particularly affected, as higher prices have proven harder to pass on to consumers in price-sensitive markets, while discretionary spending remains under pressure.
At the same time, processing margins have deteriorated sharply. Cocoa butter prices, a key source of profitability for grinders, have weakened as manufacturers reformulate products and demand slows. In Europe, processing margins fell below break-even levels in late 2025 and reached record lows toward the end of the year. Under such conditions, processors typically scale back run rates and delay investment decisions.
Excess capacity in major cocoa-processing hubs is further weighing on profitability. With more facilities than current demand can absorb, utilization rates remain low, reinforcing a cautious stance among processors even as raw material prices decline.
Looking ahead, analysts expect lower cocoa prices to begin feeding through the supply chain only gradually, with meaningful relief for manufacturers and consumers more likely in the second half of 2026. While global cocoa grindings are forecast to recover modestly during the 2025–26 season, demand growth is expected to trail the rebound in cocoa production, suggesting that the industry’s recovery will remain uneven.
Source: Bloomberg, “Cocoa Gets Cheaper But Chocolate Makers Are Still Holding Back”
https://www.bloomberg.com/news/articles/2026-01-14/cocoa-gets-cheaper-but-chocolate-makers-are-still-holding-back
