How Climate Change Is Impacting Our Sweet Tooth

• The cocoa supply chain faces issues including the use of environmentally intensive resources, unfair labor practices, and adverse weather patterns accelerated by climate change
• Climate change will continue to impact our household staples and consumers are feeling the impact, most notably through an increase in price
• Alternative chocolate addresses these supply challenges and offers a healthier and more sustainable solution free of toxic elements like lead and cadmium
• We are excited about solutions producing ingredients locally and sustainably to serve consumer needs in the face of continued climate and labor challenges

At Able Partners, we focus on products and services innovating in the positive living space and there is no superfood that makes us happier than chocolate. Unfortunately, over time, we have seen climate change increasingly affecting the things that make the lives of consumers healthier and happier. Climate change has now come for the world’s cocoa supply, leading to issues — as well as innovations — in the chocolate supply chain.

Why the world’s cocoa is in short supply

Two thirds of the world’s cocoa supply comes from two key regions: Côte d’Ivoire and Ghana, which have been exposed to particularly severe weather patterns this year. As a result, the production of cocoa has been adversely affected. Together with upcoming EU regulations mandating more transparency in the cocoa supply chain, this has caused an unprecedented spike in price. Scientists have long warned that climate change and shifting weather patterns would impact agriculture, and the effect is clear on Africa’s cocoa farms. The global production of cocoa beans has dropped by 11% this year and prices have spiked to a 44-year high, 65% higher than they were just a year ago.

The situation is so dire that The Ivory Coast’s cocoa regulator recently stopped selling cocoa export contracts for the 2024–2025 season as producers scramble to fill existing contracts. We unfortunately expect these challenges to persist.

Who Pays For What?

Manufacturers buying raw cocoa for higher prices are forced to either reduce costs elsewhere, pass on the cost to consumers, or both. For example, Hershey recently announced that it plans to cut jobs, partly due to increasing cocoa prices.¹ Additionally, chocolate strategics are shifting their focus towards products in their portfolio that require less dependency on cocoa. At the same time, the consumer is feeling the pain as retail chocolate prices increased by 11.6% in 2023.² Companies are also moving towards ways of using less chocolate by shrinking products or replacing chocolate with cocoa butter, which may not have the same health benefits.

Regulatory Pressures Are Mounting

Labor practices also contribute to challenges in the cocoa supply chain. Cocoa production has historically involved child or even slave labor. Cocoa farmers in the 1970s received 50% of a chocolate bar’s value, while today it’s just 6%. And the average cocoa farmer makes only 40% of what they need for a living income.³ Today, EU regulations and other labor standards have worked to eradicate abusive labor practices. Still, farmers are not being paid a living wage and there is more work to be done. Additionally, the EU regulation on deforestation-free practices was put into place in 2023, compelling companies to prove products sold in the EU are deforestation-free. In addition to the issues related to planetary health and labor exploitation, human health is also an issue, as high amounts of cadmium and lead have been found to be present in chocolate.⁴

But it’s not all bad news. Where there is a lack of cocoa, innovative companies can help fill the gap.

Introducing the First Cell-Cultured Chocolate

California Cultured, an Able portfolio company, has created the world’s first cell-cultured chocolate. Individual cells are isolated from premium cacao strains and cultivated in fermentation tanks. The beans are then roasted and ground into chocolate in a process that utilizes 90% less carbon than traditional chocolate manufacturing. Additionally, this lab-grown approach introduces precision in the chemical compound structure thereby increasing the concentration of beneficial compounds such as flavanols. Recent research suggests that flavanols have antioxidative, anti-inflammatory, and antiviral properties.⁵

The economics spell a bright future for cell-cultured chocolate. Compared with animal cell culture production, producing plant-based cell-cultured materials is much more capital efficient because the initial materials are less costly and companies don’t need specialized production fats. California Cultured’s product is chocolate, and is identical to traditional chocolate on a cellular level, making regulation potentially easier. California Cultured ultimately aims to reach parity with cocoa prices, or even be priced more affordably. California Cultured’s lab-grown cocoa not only mitigates deforestation, exploitation, and unpredictable supply issues, but it also produces chocolate that is healthier for consumers, scalable from an economics perspective, and better for the planet.

Large chocolate strategics have taken notice and are adopting new innovations. Meiji, Japan’s largest chocolate manufacturer, signed a ten-year partnership with California Cultured to use their cell-cultured chocolate in their products. Meiji will be launching a co-branded product with California Cultured in the US next year following FDA approval.

Other Alt-Chocolate Companies Bypass Chocolate Altogether

There are other innovators addressing the global cacao challenges. Win Win, a UK based company, is launching the world’s first cacao-free chocolate that follows a similar manufacturing process, but is made from cereals and legumes. Similarly, Planet A Foods uses industry byproducts, such as oats, and ferments them to create chocolate-tasting products. Alongside California Cultured, Win Win and Planet A Foods aim to increase the ability to produce ingredients locally and sustainably in the face of continued climate and labor challenges.

The Intersection of Climate Change and the Consumer

As the supply of traditional cocoa continues to be squeezed, consumer demand for chocolate only continues to increase. The dynamics in this industry are an example of the way that climate change will continue to impact our household staples. We remain committed to investing in products and services that help consumers to live healthier, happier and more meaningful lives, and our hope is that the rise of alternative chocolate sources, like California Cultured, will not only improve the economic outlook and labor practices for the industry, but also deliver better health benefits for all chocolate connoisseurs.

Chocolate is not the only consumer area being affected by climate change. There are new innovations in products such as SPF and insect repellent that protect consumers from the ever-mounting effects of climate change. While climate change is an issue that demands gravity and serious policy change, it is also an opportunity to showcase the ingenuity of human minds always adapting to new circumstances.

We’re interested in meeting companies that are solving problems at the intersection of where climate change meets the consumer. If that’s you, get in touch with us at info@ablepartners.nyc.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

¹Hershey to lay off workers as automation drive kicks in.

²Market research data from Circana

³Child Labor in Cocoa Supply Chains: Unveiling the Layers of Human Rights Challenges.

⁴Lead and Cadmium Could Be in Your Dark Chocolate.

⁵Flavanols from Nature: A Phytochemistry and Biological Activity Review.