Food groups develop a taste for cocoa alternatives

Skyrocketing raw commodity prices and growing sustainability pressures are prompting chocolate and confectionery companies to pour funding into finding alternative ingredients for confectionery.

Mondelez International, the maker of Oreo, was among the investors who participated in a $4.5 million seed funding round for cell-based cocoa startup Celeste Bio earlier this month, while British food ingredients company Tate & Lyle also announced It has partnered with BioHarvest Sciences to develop sweeteners from synthetic molecules derived from plants.

These moves came at a time when the prices of cocoa futures contracts traded in New York rose to more than $10,000 per ton, continuing the amazing rise that began a year ago. At their peak in April, prices of the main ingredient in chocolate exceeded $12,000 per ton, almost three-fold higher than in January.

Farmers in West Africa, who produce more than two-thirds of the world’s cocoa, have faced a double whammy of disease and bad weather, driven by climate change, which has limited production and worsened the global grain shortage.

“If we don’t change the way we get cocoa, we won’t have chocolate in two decades,” said Michel Berici Golomb, CEO of Celeste Bio. With cell-grown cocoa, “the industry will not need to rely on nature,” she added.

The global shortage and record prices are driving increased interest from chocolate and confectionery companies as well as investment, according to Golomb. “They are really concerned about having a sustainable and consistent supply of high-quality cocoa,” she said. “Everyone wants to be part of the party.”

The Israeli company, founded in 2022, is one of a growing group of startups using cell culture technology to bypass the need for traditional farming methods that are vulnerable to climate change and market instability.

These innovations could also provide a solution to regulatory challenges, such as the European Union’s new deforestation regulation, which requires proof that commodities like cocoa were not grown on deforested land, adding further pressure on supply chains and prices.

Other groups are looking at how to make sweets using alternative, easier-to-obtain raw ingredients. Last year, Finnish confectionery company Fazer introduced a limited edition cocoa-free “chocolate” made with local malted rye and coconut oil. Since 2022, the Helsinki-based company has also been working with VTT, Finland’s state-owned research center, to grow cell-based cocoa pods.

“For nearly four years, research has been telling us that climate change will impact the availability and price of cocoa,” said Annika Burr of Fazer Confectionery’s Forward Lab. “This year it became a reality.”

Elsewhere, Cargill, the world’s largest agricultural commodities trader, last year partnered with startup Voyage Foods, which produces sustainable foods such as chocolate and nut spreads without their traditional ingredients of cocoa, peanuts and hazelnuts. It is made using grape seeds, sunflower protein flour, sugar, fats and natural flavours.

“Cocoa prices weren’t in the news when we started. Most people in the US or UK probably couldn’t point to where their cocoa was grown. Now, with prices rising, it’s much easier to know,” said Adam Maxwell, CEO of Voyage Foods. Why it is necessary.”

Cargill added that consumers were looking for “more sustainable indulgences, that taste great and are produced without using any nut or dairy allergens in the recipe formulation.”

While the price of sugar – whose production is not included in EU rules – has remained relatively stable, the industry is also facing increasing pressure to address its environmental footprint and meet consumer demand for healthier options.

Tate & Lyle, once a sugar producer and now trying to become a sugar reducer, is working with startup BioHarvest Sciences to develop artificial sweeteners derived from plant cells.

BioHarvest Sciences has invested $100 million over the past 17 years to develop technology that extracts and then amplifies important plant compounds that increase sweetness while suppressing bitter flavors.

The partnership could help Tate & Lyle move away from ultra-processed foods, which have come under scrutiny from investors and scientists.

“Our customers and their consumers want something that is cost-effective and naturally sourced,” said Abigail Storms, a senior vice president at Tate & Lyle, which sells its products to packaged food companies such as McVitie’s biscuit maker Pladis.

Although the volatility of commodity markets may prompt investment in alternatives, growing ingredients in a laboratory rather than on a tree or field is not cheap.

Celleste Bio aims to reach cost parity with pre-2024 cocoa prices — about $7,000 per ton for cocoa butter and $3,000 for cocoa powder — by 2027 once it is on the market and ramps up production, Golomb said.

Tate & Lyle also wants to ensure that products made with its sweeteners don’t cost more than a “full calorie or full sugar substitute,” Storms said. “It’s all about democratizing those benefits.”

The move away from traditional commodity markets is also a battle against red tape and changing consumer expectations. For example, Fazer Group’s cocoa-free bar cannot be called “chocolate”, but is instead labeled “candy tablet” due to EU rules that reserve the name for products containing cocoa.

Cell-based cocoa faces a similarly difficult regulatory maze, according to Burr, with approval of “novel foods” likely to be steeper in the European Union than in the United States.

Winning over consumers can be equally difficult. Initial research by Fazer Group suggested that transparency about how cell-based cocoa is made could help sway public opinion, but taste and texture were the final tests, Burr said. “Consumers really expect it to taste and texture similar to traditional cocoa,” she said. “There is still work to be done.”