Some of the biggest food companies in the world have signalled they’ll lift prices this year to counter historically high coffee and cocoa prices.
Nestle, Mondelez and Hershey’s indicated that prices may rise in 2025, but cautioned that consumers, especially in the United States, were approaching the limit of how much they’re prepared to pay for non-essential items.
In Europe and the US, companies have been presenting their financial results for the first quarter of 2025 and sharing their estimates for how much money they’ll make in the coming year.
In addition to rising input costs, the concern about the impact of the US President Donald Trump’s tariffs was weighing on consumer sentiment in the US.
Pain in chocolate markets
Prices for coffee and cocoa have soared in recent years, as crop disease and poor growing conditions have limited supplies in markets with strong, growing demand.
In the cocoa market, where crops are concentrated in north-west Africa, prices started rising in early 2024 and have been at historically high levels ever since.
Hershey’s CEO Michele Buck was hoping the cocoa market’s retreat from its 2024 peak would be sustained and that cocoa farmers could reap the benefits of the higher prices.
“The top three global cocoa markets are tracking to a 20 per cent increase in supply this season,” she said.
“High cocoa market prices are incentivising investment in origins around the world, farmer prices have also increased in the Ivory Coast, which should enable more investment in fertiliser, pesticides, and other techniques to improve yields.”
Mondelez, the parent company of Australia’s Cadbury, is also hopeful that over the long term, cocoa prices will trend downward.
“If cocoa comes down, I think quite frankly it is nirvana for us,” Mondelez International CFO Luca Zaramella said.
“I look for instance at cocoa butter, which is what we buy the most, as opposed to cocoa powder — cocoa butter prices are already coming down for 2026.”
Mondelez Australia makes Cadbury products in Tasmania. (Supplied: Cadbury)
In negotiations with stockists and retailers, Nestle, owner of the popular coffee-pod brand Nespresso, has been lifting its own prices.
“Over the last year, we have seen unprecedented cost inflation in coffee and cocoa,” Nestle CEO Laurent Freixe said.
Nestle CFO Anna Manz told investors the company was passing those costs on to suppliers and retailers.
“As you look ahead, keep in mind that our consumers purchase Nespresso less frequently than our other categories, so it will take a while to see the consumer impact of the price increases,” Ms Mans said.
Celebrity endorsements are part of the sales pitch
Mondelez International, which also owns Toblerone and Oreos, said it was responding to rising costs through price increases and diversifying its packaging.
“And that doesn’t necessarily mean all downsizing,” CEO Dirk Van de Put said.
“It means that we will offer a whole range of pack sizes to the consumer and so the consumer certainly has many more options as it relates to price points they would like to buy our products.”
Mr Van de Put said the company was waiting to see how consumers would respond to the higher prices it has negotiated.
He said the company lifted its prices in Australia in 2024, and would do it again this month.
“There is very, very low cross-substitution happening,” Mr Van de Put said.
“If you don’t have your chocolate, there is not really that many other products you can go to that give you the same satisfaction and indulgence.”
In the lead-up to Easter, across all the brands Mondelez owns, Mr Van de Put said he was “very happy” with growing sales in Australia and Brazil.
A spokesperson for Mondelez International confirmed that from May, Australian shoppers would see “further price and packaging adjustments on selected products”, and the introduction of a 100g Cadbury block.
Companies have also been investing in celebrity partnerships encourage shoppers to hand over their money.
Mondelez said a partnership with musician Post Malone had delivered a sales boost in 2024, and it was hoping a similar deal with Selena Gomez would deliver in 2025.
Hersheys touted an upcoming activation with the Pokemon brand, as well as a new “Shaq-a-licious” gummy it hopes will woo consumers this year.
US consumers tightening purse stings
In the US, the world’s largest consumer market, many of the big companies highlighted weakening consumer sentiment over the first three months of the year.
“In Zone Americas, macroeconomic uncertainty has made for a challenging environment with consumer confidence fragile,” Nestle’s Ms Manz said.
In other markets, like the UK, Ms Manz said consumers had responded to higher prices by delaying purchases.
The initial reaction was a bit more muted because consumers in the UK generally have a spare bottle of Nescafe in the cupboard.
“And so they delay their purchasing action, while they wait to see how prices play out and how that moves,” Ms Manz explained.
In the US, Mondelez saw poorer consumer sentiment play out through declining sales of its snacks.
Mondelez executives described a drop in cocoa prices as “nirvana” for the company. (Supplied: Mondelez International)
“I think what’s going on is that the consumer feels very uncertain about the future, and as a consequence, they’re trying to prioritise essential items. And in food, those are essential food items like meat, vegetables, eggs, and so on,” Mr Van de Put said.
“If you look at the snacking categories, I think almost all of them, except for yoghurt, are down versus last year in volume.”
Trump’s tariffs contributing to uncertainty
Hershey’s estimates the US’s tariff policy will cost the company around $US15-20 million.
Among the key cocoa growing regions, US tariffs range from 10 to 47 per cent.
“The current US levy on cocoa is an exposure that we must manage on top of the cocoa market’s unprecedented recent price swings,” Mr Buck said.
“Cocoa cannot be grown in the United States and thus, we are engaging with the US government to seek an exemption.”
Without an exemption, or a reversal of the tariff policy, Hershey’s CFO Steve Voskuil estimated even higher costs for the company later in the year.
“The unmitigated impact could be up to $US100 million per quarter for Q3 and Q4,” he said.
“If you break that down, two-thirds of it are either cocoa or the Canadian retaliatory tariffs.”
Nestle and Mondelez both predicted the impact of tariffs to be minimal on their overall business, as their diversified range of products are mostly manufactured inside the US.
“In the tariff environment, we’ve got that unique position that we make where we sell,” Nestle CEO Laurent Freixe said.
“We produce essentially local for local. And you look at our three big geographies — US, Europe, China — more than 90 per cent of what we sell is produced locally.”
Mr Zaramella said the tariffs were causing a “small and manageable impact” for Mondelez in the US.
