Costs hit record highs, is chocolate "assassinization" a reality? Lindt and Ferrero lead the price war

Since 2025, the Chinese chocolate market has ushered in a wave of general price increases. Many leading multinational chocolate companies have successively raised product prices and notified channel dealers through internal letters.

In February this year, Swiss high-end chocolate brand Lindt issued a "Communication Letter on Adjustment of Suggested Retail Price and Supply Price", announcing price increases for some products due to the continued increase in the price of cocoa beans and the need to increase brand value. In late March, Mars issued price increase notices for Dove chocolate and other products, ranging from 4.9% to 15%. In April, Ferrero became another leading company to follow up with price increases. The company issued a price adjustment letter for chocolate products, involving four products under its Kinder brand, with prices increased by 6%-8%, effective from June 1, 2025.

Although Hershey and Nestlé have not yet publicly announced plans to increase prices in China, industry observers point out that they are also facing severe cost pressures and are likely to follow up.

On the one hand, the management of Hershey and Mondelez International has said that as the prices of commodities such as cocoa continue to rise, the prices of snack products will be further increased in the future. Mondelez even said that the price of chocolate snacks may rise by as much as 50%. On the other hand, some high-end brands have chosen to "quietly" raise prices - for example, the Belgian chocolate brand Godiva recently raised the prices of some products.

Even Nestlé, whose chocolate business accounts for a relatively small proportion, revealed in its first quarter financial report that due to the soaring costs of coffee and cocoa, it had to raise the prices of products such as instant coffee and KitKat chocolate bars to absorb the pressure from tariffs and rising raw materials. All signs show that the upward trend in prices in the chocolate industry has become a trend, and it is difficult for more brands to remain immune.

Behind this round of collective price increases in chocolate is the overall rise in upstream raw materials and operating costs. The first to be affected is the price of cocoa beans, the most important raw material for chocolate, which has soared in the past two years, even exceeding the increase in gold.

According to data from the International Cocoa Organization (ICCO), due to the severe production cuts in the main producing areas of West Africa, the global cocoa supply gap in 2023/24 may be as high as 374,000 tons, a surge of 405% over the previous year. The main producing areas of Ghana and Côte d'Ivoire have suffered from abnormal climate and pests and diseases in recent years, resulting in a sharp drop in production.

And the price of cocoa futures has also risen steadily, reaching a historical peak of US$12,000 per ton in April 2024. Although it has fallen back, it still lingers at a high level. Roughly estimated, from the beginning of 2023 to the end of 2024, the price of cocoa raw materials has nearly doubled. ICCO predicts that the cocoa crisis caused by climate change will keep prices high until at least 2025.

In addition to cocoa beans, the cost of other raw materials is also high.

The prices of ingredients such as sugar and dairy products have risen due to global inflation, and the cost of packaging materials is also rising. In terms of logistics and transportation, international oil prices and freight rates are still at a higher level than before the epidemic after experiencing sharp fluctuations in the past few years. In addition, the rise in energy prices has increased expenses in warehousing, cold chain and other links.

In terms of labor costs, both in the planting and picking of cocoa in the country of origin and in production and distribution in China, labor costs have steadily increased in recent years. For multinational chocolate companies, exchange rate fluctuations also have an impact: for example, the depreciation of the RMB against the US dollar and the Swiss franc has pushed up the local currency cost of imported cocoa and high-end finished chocolate.

Changes in international trade policies are also a factor that cannot be ignored.

In recent years, the main cocoa producing countries have jointly demanded an increase in the purchase price of cocoa (for example, Ghana and Côte d'Ivoire have implemented a cocoa bean export premium to protect the income of growers), which has undoubtedly raised the global raw material procurement cost. In addition, trade regulations implemented in some major consumer markets have also indirectly increased cost pressures, such as the EU's sustainable procurement regulations for agricultural raw materials and import tariff adjustments, which may be reflected in the final selling price.

Overall, the cost of the entire chain, from raw material planting, international transportation to factory production, has risen across the board in the past year, forcing chocolate manufacturers to focus on price increases and pass part of the pressure on to the market terminals.