Cost reduction in chocolate formulation in times of high cacao

 The raw material, which was always valuable, doubled in price from January to March 2024. Although commodity price fluctuations are expected by the market, cacao has taken the breath away from even the most experienced companies. Of course, this will affect the price of your main product: CHOCOLATE.

 The main cocoa derivatives, liqueur, cocoa butter and cocoa powder, are following this growing increase and the price is surprising buyers from all over the world on a daily basis.

 The main reasons for this increase are the scarcity of this raw material. Climate change, the effects of El Nino and the growing demand for cacao combine to skyrocket prices.

 As a result, companies are looking for cost reduction strategies, so that the consumer does not feel so much impact with the price increase. The strategies mainly involve reformulating the product and reducing the size of the package.

 The reformulation of products, seeking to adapt to market reality, was one of the main strategies of the food industry, for years, to circumvent price increases, inflation and other costs, without losing competitiveness and remaining in the market. What happens, however, is that if this strategy has worked over the years, and at least in the last 10 years, consumers are taking a stand so that the products remain in their original formulations.

 In the chocolate market, 2 main strategies are adopted when it comes to reducing the cost of formulating the product: replacing cocoa butter and increasing the sugar percentage.

 Both strategies are to reduce the use of cacao in chocolate formulation. Sugar is used in the formulation, since of all raw materials, it has the lowest value, that is, a small reduction in the percentage of cocoa and an increase in the amount of sugar, can bring satisfactory financial results. The consequence of this, over the years, is that the mass consumer has adapted to the sweet palate and no longer recognizes the taste of cocoa in chocolate. Disastrous result, since the food of the gods (as chocolate was called by the ancient peoples), became a sweet and villain of good nutrition.

 The second option is the replacement of cocoa butter with other vegetable fats. The fatty phase in chocolate is very important to bring about the characteristic chocolate texture and the desirable melting. In the formulation of chocolate, it represents at least 30%. However, cocoa butter, among the fats, is the most expensive on the market. Replacing it is also a strategy to reduce costs. The option for use in chocolate is CBE (acronym in English for COCOA BUTTER SUBSTITUTE), the fat equivalent to cocoa butter. In other words, the physico-chemical structure of CBE is very similar to cocoa butter and can be partially or completely replaced in a formulation. However, there is also a sensory impairment for chocolate. The replacement, even if in a low amount such as 5%, is noticeable in the flavor and texture of the chocolate, leaving a waxy residue and impacting the chocolate flavor.

 However, for the fine chocolate and bean to bar market, where chocolate flavor is one of the greatest benefits delivered to the consumer, both options are not accepted. This is already an audience that agrees to pay more for a product, precisely because it is low in sugar and free of vegetable fats.

Reducing the size of the product per package can be a valid strategy, a smaller outlay per product can encourage experimentation and draw consumer attention to your product, even with higher prices.

 The moment requires good strategies, compromising the quality of your chocolate is no longer a solution as it was in the past. Take a look at the actions that the chocolate category as a whole will take and move on. Chocolate will certainly continue to be enjoyed. In fact, it is worth remembering that the price has risen, as consumption remains high, even with all the global challenges we are experiencing, chocolate remains a worldwide passion.