Why the chocolate in this year’s holiday candy may be “fake”

If you open a package of chocolate this holiday season, chances are it doesn’t actually contain cocoa.

Market turmoil, ethical concerns and questions about sustainability are prompting some chocolate makers to ditch cocoa and use alternative ingredients, raising concerns that the real thing may soon become a “luxury” for consumers.

Poor agricultural conditions in Ghana and Ivory Coast, two of the world’s leading cocoa producing countries, have led to declining crop yields and a roller coaster of cocoa prices in recent years. After soaring to an all-time high of over $12,000 toward the end of last year, cocoa futures It has fallen by more than 50% through 2025, despite tentative signs of crop recovery.

Price fluctuations are putting businesses in the industry at risk and ultimately affecting consumer goods, with chocolate prices rising 30% in the year to October, according to data from Circana and the U.S. Bureau of Labor Statistics.

In its third quarter earnings report, it said: Mondelez International The Cadbury, Milka and Toblerone maker flagged “cocoa volatility” and its “ability to effectively hedge” related cost pressures as potential issues that could prevent it from achieving its financial goals.

As manufacturers deal with these unpredictable conditions, some are choosing to reduce their exposure to the cocoa market by changing their ingredient formulations.

Earlier this year, changes to the formula of McVitie’s Club and Penguin candy bars caused a stir in the UK, with reports that the products could no longer be called chocolate. Both products will now have to be labeled as “chocolate flavored” after parent company Pladis reduced their cocoa content to cut costs.

Pradis declined to comment to CNBC on whether the changes had an impact on sales.

But Massimo Sabatini, co-founder and CEO of Italian startup Foreverland, says the move away from cocoa is accelerating among the international confectionery industry, and the use of “fake” chocolate in more affordable products could become the norm. Foreverland makes chocolate-like products using carob, pumpkin seeds and chickpeas and sells them to companies that make sweets, baked goods and ice cream.

“There are many products in the chocolate industry, from (bars) to products where cocoa is actually a participant rather than the protagonist,” he told CNBC, referring to products such as cookies, chocolate-flavored cereals and chocolate-coated snacks. “While alternative chocolates will take over this large market, I believe[pure chocolate bars]will increasingly become a luxury item.”

To illustrate his point, Sabatini cited recent chocolate trends in Dubai, noting that some of these bars were selling for as much as 80 euros ($93.09) per kg.

“[The chocolate market]is already moving in this direction,” he argued.

Adding to price pressure, Foreverland and other alternative manufacturers are touting their products as solutions to long-standing concerns about sustainability and ethical sourcing in the cocoa industry.

“When you compare this alternative to other alternatives on the market, such as plant-based burgers, a burger is a burger, while chocolate has so many different uses,” Sabatini said.

“Chocolate can be a snack, it can be a bar, it can be a biscuit, it can be anything. There are hundreds of different products where chocolate is not the main character. So alternative chocolates could really be a solution, bringing more sustainable products to market, but at the same time reducing the pressure on the cocoa supply chain.”

Drew Geraghty, a New York-based commodity broker with ICAP, told CNBC that pure chocolate could remain expensive for some time to come, despite signs of price recovery in the futures market.

Larger cocoa users typically lock in prices far in advance, often covering eight to 10 months of production, giving them more control over price risk, while smaller producers don’t have that flexibility and typically only hedge three to six months ahead, Geraghty said.

A futures is a contract in which the buyer of the contract agrees to buy something (in this case, cocoa) at a set price on a set date. Cocoa futures for March delivery were trading at $5,897 per tonne in New York.

Geraghty noted that manufacturers who bought futures eight months ago were buying into the highs seen in late 2024 and early 2025.

“If you look back at 2023 and 2024 and when prices really spiked in early 2025, shelf prices didn’t react immediately because end users were still juggling low-cost futures coverage. What end users bought in the futures market six to eight months ago is going to determine the price,” he explained.

“With the market down, say, 50% since the beginning of the year, it’s going to be cheaper today, and on the retail side, it’s going to be cheaper six to eight months from now.”

Jessica Karch, marketing manager at Planet A. Foods, a German company that makes chocolate substitutes made from sunflower seeds, agreed that cocoa substitutes will become increasingly popular in the future.

“We believe that the challenges we currently see in the cocoa supply chain are not going away,” she said. “Therefore, prices may stabilize to some extent, but they will not return to the (cheap) levels they have seen in the past.”

Karch said demand is already growing on Planet A, noting that there are more types of substitutes coming to market.

“We love chocolate and we don’t want to replace it, but we also feel that inequality is growing,” she added. “Because on the one hand, there are problems with the supply chain, and on the other hand, demand is increasing, especially in countries like China and India. That’s why we see a gap and we want to help fill that gap.”

Karch and Sabatini told CNBC that demand for their products is increasing. And they’re not alone in the market, with a number of start-ups including Britain’s Nukoko and America’s Voyage Foods offering what the former calls “cocoa-free chocolate.”

Natasha Linhart, CEO of fast-growing consumer goods wholesaler Atlante, told CNBC that chocolate alternatives are likely to become more popular in “certain niche and hybrid applications.”

“Cocoa-free or fermentation-based lumps are increasingly being used in coatings, fillings and bakeries to replace some of the cocoa content,” she said. “Many manufacturers are already diluting the cocoa by shifting their mixes to ‘filled’ products. Brands like Milka, for example, have expanded their range of products to fill a significant portion of the bar with yogurt cream or rice krispies, reducing the cocoa intensity while maintaining the perception of luxury and value.”

Linhart said he expects to see more products adding fillers to traditional cocoa to manage costs and supply risks.

“However, in mainstream chocolate tablets, cocoa will remain the backbone of the category due to taste expectations and the emotional weight associated with ‘real chocolate,'” she said.

ICAP’s Geraghty said “PTSD in the market” is likely to increase the use of cocoa substitutes where manufacturers can avoid the problem.

“At one point, the price of cocoa butter was three times the price of cocoa futures, so cocoa futures were $9,000 or $10,000 a tonne, whereas cocoa butter was $27,000 to $30,000 a tonne, so it was very expensive,” he said.

“So[manufacturers]scramble to reduce bar sizes and look for substitutes wherever they can. Why spend that money when you can substitute with shea butter or complex chocolate, even though the price has been cut in half?”