The challenge: Chocolate makers are feeling the squeeze as cocoa powder prices have jumped nearly 16% YoY due to a global shortage, per Bloomberg.

• The situation worsened when food manufacturers tightened supply after they began substituting expensive cocoa butter—which makes up about 20% of a typical chocolate bar—to cut costs.
• In response, some manufacturers are turning to alternatives like carob powder, while others are adjusting their product mix to incorporate more ingredients such as nuts, or even shifting focus to non-chocolate offerings altogether.

The situation highlights the increasingly precarious position of food manufacturers, who are not only navigating shifting trade policies and consumers trading down to private labels, but also contending with a volatile global supply chain marked by sudden and unpredictable disruptions.

Why it matters: Chocolate is an affordable indulgence that often remains in consumers’ shopping carts even when budgets are tight. But if prices climb too steeply, even loyal shoppers may start to cut back.

And chocolate isn’t the only item under pressure. Fresh tomatoes may be next in line, as the expiration of a decades-long trade agreement with Mexico could trigger a 17% duty on imports, forcing companies like NatureSweet to raise prices nearly 10%, CEO Rodolfo Spielmann told Bloomberg.

These examples highlight a clear challenge: Everyday grocery staples are increasingly vulnerable to cost pressures from both commodity markets and trade policy shifts.

Our take: Small price increases add up—especially in an environment where consumers are still scarred by the coronavirus-era wave of inflation.

Today’s shoppers are hyperaware of price hikes and increasingly willing to switch brands, delay purchases, or trade down. That puts added pressure on retailers and manufacturers to either justify price increases through quality and innovation—or find new ways to absorb rising costs without compromising brand trust.