Lab-Grown Chocolate Offers Limited Relief Amid Ongoing Supply Chain Challenges

Published Sep 19, 2024

The global chocolate industry faces rising prices, driven by high cocoa costs. Key factors include unfavorable growing conditions and crop diseases in Ivory Coast and Ghana, which produce two-thirds of the world's cocoa. The ICCO reported that cocoa prices in Aug-24 averaged USD 6,792/mt, a 97.2% increase from the previous year. While companies explore alternatives like lab-grown cocoa and cocoa-free technologies to mitigate supply challenges, these innovations are unlikely to replace traditional cocoa in the near term. Though promising, such solutions fall short of addressing underlying issues such as deforestation and the struggles cocoa farmers face. To ensure the industry's sustainability, long-term efforts to improve agricultural practices and support farmers remain essential.

The global chocolate industry continues to grapple with elevated prices, primarily driven by sustained high cocoa costs. The persistent rise in cocoa prices can be traced back to several adverse factors impacting production in Ivory Coast and Ghana, which produceaccounting for roughly two-thirds of the world's cocoa supply. Unfavorable growing conditions and crop diseases have severely hampered cocoa yields in these regions. This has heightened concerns over further production declines, exacerbating fears of a constrained global cocoa supply.

As a result, the International Cocoa Organization (ICCO) reported that its daily cocoa price in Aug-24 averaged USD 6,792 per metric ton (mt), a significant 97.2% increase from the USD 3,444/mt recorded in Aug-23. This price surge reflects the ongoing supply challenges and the global demand for cocoa, which shows no signs of diminishing despite rising costs.

Figure 1. ICCO Daily Cocoa Price

At the Cocoa Association Asia (CAA) International Cocoa Conference 2024, experts convened to discuss potential solutions to the cocoa price crisis. Trending solutions such as lab-grown cocoa or cocoa-free chocolate technologies offer a glimpse of innovation. For instance, lab-grown cocoa could mitigate some of the current issues, such as deforestation, as it would not rely on land-intensive cultivation practices. Additionally, 25% of Asian consumers have already expressed a favorable perception of cell-based ingredients, indicating a growing market for such alternatives. However, they are unlikely to replace the role of authentic cocoa in the global food system.

Furthermore, companies like Voyage Foods and Cargill, leaders in sustainable food, are developing novel technologies to replicate chocolate and nut spreads without using cocoa, peanuts, or hazelnuts. United Kingdom-based chocolate manufacturer Nukoko is working on fermenting fava beans using the same processes applied to cocoa beans to create cocoa-free chocolate. These innovative approaches aim to replicate the indulgent experience associated with chocolate, targeting consumers seeking more sustainable options without sacrificing the taste and texture they love. However, Nukoko is still in the research and development stage, having recently acquired USD 1.5 million in funding. The company is also forming a strategic partnership with a co-manufacturer to advance its production capabilities. In addition to the venture capital backing, Nukoko secured a grant from Innovate UK, further bolstering its financial resources for ongoing research and development. These investments will be crucial in helping Nukoko advance its mission to develop sustainable, cocoa-free chocolate alternatives and scale its operations.

Figure 2. Nukoko Founders Kit Tomlinson, Dr David Salt, and Ross Newton

However, despite the promise of these alternatives, they are not expected to offer long-term solutions to the global cocoa industry's supply chain challenges. While lab-grown and cocoa-free products may address market demand, they fall short of tackling the deeper issues affecting cocoa farmers and the broader environmental impact of traditional cocoa production, particularly deforestation. Moreover, the widespread adoption of these technologies may take time, leaving the industry still reliant on cocoa beans for the foreseeable future.

As the chocolate industry looks toward the future, it is clear that while innovative solutions may ease some market pressures, they will not provide a comprehensive resolution to the supply chain challenges or alleviate the burden on cocoa-producing regions. Addressing the root causes of high cocoa prices, including improving agricultural practices, supporting farmers, and tackling environmental concerns, remains critical to ensuring the long-term sustainability of the chocolate industry.