ORLANDO, FLA. — Dirk Van de Put, chairman and chief executive officer of Mondelez International — the owner of such chocolate brands as Cadbury, Milka and Toblerone — is worried higher prices for chocolate due to record high cocoa prices may force some consumers to leave the category. In an interview with Food Business News, he highlighted the steps Mondelez is taking to ensure as many consumers as possible stay in the category.

“Prices in chocolate need to go up,” he said during a Feb. 18 interview at the Consumer Analyst of New York conference taking place in Orlando. “I would say, per kilo, that by the end of ‘25 for chocolate, when it's all said and done, (it) will be 50% more expensive than it was in 2023. That is what I would guess.

“And … that’s our chocolate. If you are selling at double our price it’s going to be 25% more expensive and if you’re selling private label, then it’s probably going to be 100% more expensive.

“The question is how do you deal with that?”

Adding to the challenge is current consumer sentiment in the United States, which is very value focused. Van de Put said that compared to 2019, when many consumers were flexible about how much they would spend on groceries, today $200 is a hard cap for many.

“… It’s very clear and they have to fit everything they want around that budget,” he said. “That’s why eggs are so troubling; consumers have to have eggs, and it (the cost of eggs) makes a big dent in the maximum they will spend.”

For Mondelez, the answer to higher cocoa prices is assortment, agility, products formulated with chocolate and other ingredients or inclusions that bring costs down, and “pushing premium harder.”

“We’ve gone through a massive exercise of resizing but also launching new sizes so the consumer has a choice of buying chocolate at the old cost they were used to,” Van de Put said. “To give you an example, in Europe we used to offer our chocolate in the €2 and the €5 range — €2 for 100 grams and €5 for 250 grams. We are now going to be at €1, €2, €3, €4 and €5. There is so much more choice, but for the €2 you don’t get 100 grams — you get 90 grams.”

The initiative has been completed in about half of the company’s global portfolio, Van de Put said.

Mondelez also is closely monitoring consumer reaction to the higher prices in every region of the world where it sells chocolate.

“You don’t know what’s going to happen when the consumer is confronted with this situation,” he said. “So, following that very closely country by country and channel by channel is going to be critical.

“We will immediately need to react, because once the consumer has made up their minds you might lose them in the category.”

Local teams around the world have been given the flexibility to react to changing market conditions quickly.

“For example, we did a 12% price increase in the UK and volume wasn’t affected,” Van de Put said. “So, fine. We did a 20% price increase in Scandinavia and the volume started to decrease. The team discovered it and quickly did more promotions and brought the price down a little bit.

“Maybe they (consumers) will buy less chocolate, but we want to keep them in (the category) because they will get used to the prices and may start to buy more.”

Product development also will play a role.

“You can imagine that when cocoa is very expense a product that combines chocolate with Bischoff or Oreo in it is going to be cheaper for us to make than a pure tablet,” he said. “We are going to push a little bit more products that combine ingredients and inclusions but also bring innovation to the category.”

In emerging markets, the company is confronted with the inability to raise category entry price points.

“We don't want to walk away from that — That’s very dangerous and we could lose a lot of consumers in the category,” Van de Put said. “There we have to bite the bullet and accept that our margins will be significantly less.”

To offset some of margin pressure in emerging markets, Van de Put said the company is going to “push premium harder.”