#003 - What can cocoa teach to the coffee industry?

The nicest thing about our job is being connected to both coffee growers and roasters. It offers a unique perspective on pricing. 

The coffee market is too complex. So we focus on its fundamentals rather than speculating. One cool way is by comparing coffee to other ingredients - and cocoa provides a relevant parallel.

Like coffee, cocoa faces similar challenges: its supply chain is concentrated in specific origin countries, trading companies, and processors. It is vulnerable to risks such as climate change, geopolitics, and shifts toward alternative products.

Cocoa’s recent volatility is an example for coffee. After a price surge in 2024 driven by supply shortages, cocoa prices declined sharply in 2025 as demand adjusted. A key factor was substitution: processors, facing high costs, reformulated products by replacing some cocoa butter with cheaper vegetable fats (such as palm or shea oil).

This led to changes for consumers. In the UK, for instance, products like certain white chocolate varieties from brands including Nestlé's KitKat and McVitie's Digestives no longer meet the legal minimum of 20% cocoa butter required to be labeled as "white chocolate." As a result, packages were changed to ‘chocolate-flavoured’.

Additionally, data from Q2 2025 showed reduced processing demand, with cocoa grindings dropping around 7% in Europe and 16% in Asia year-over-year.

Turning to coffee, a similar dynamic can be observed with the growing emphasis on robusta beans. Many influential voices in the industry have been advocating Robusta. Robusta typically trades at roughly half the price of arabica, offering a more cost-effective option. Major players, including Nescafé, already incorporate robusta in their compositions to balance affordability at the expense of quality and taste.

These examples from cocoa remind us how markets adapt to price pressures. It encourages us to appreciate the careful craftsmanship from your local roasters.

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i) NY ICE Coffee C futures closed at 341.20 USc/lb (Dec 19), down -7.6% weekly.

ii) Brazil B3 Arabica futures at ~$374.30/bag (USD), down ~7% weekly.

iii) BRL/USD FX rate down 1.62% weekly.

iv) Santos-Rotterdam 20' container freight proxy stable; no major weekly changes reported (typical ~$1,500-$2,500).

Highlights:

1. Conab ups Brazil 2025 coffee output to 56.54M bags, easing prices.

2. USDA forecasts 2025/26 global coffee deficit.

3. J.M. Smucker pauses price hikes.

4. Nestlé eyes Blue Bottle sale at discount to $700M.

5. Coca-Cola pushes Costa Coffee sale, potentially halved value.

6. US consumers face sustained high prices post-tariff reset.

7. Vintage Coffee expands capacity, shifts to premium mixes.

8. Compose Coffee hits 3,000 stores, sold for $340M.