What the largest chocolate company says about cocoa bean prices

Cocoa bean prices are unlikely to surge back to their recent peaks, according to UBS, which referenced remarks from Barry Callebaut’s Chief Executive, Hein Schumacher. The world’s largest chocolate producer, accounting for about 20% of the market, views the present cocoa market differently compared to the conditions that precipitated a steep price increase a few years back.

Cocoa prices have surged to roughly £4,000 to £4,500 per tonne from £2,000 to £2,500 earlier this year, already seemingly accounting for potential weather risks linked to El Niño. The chocolate sector now maintains approximately 500,000 tonnes of cocoa bean inventory, representing around 10% of the annual global crop. This surplus, resulting from two recent crops, contrasts sharply with the deficits and tighter inventories observed during the previous price boom.

The inventory buffer might impede cocoa prices from reverting to their recent highs and curb cost pressures on chocolate manufacturers in 2027 and 2028.

For consumers, Barry Callebaut perceives no need for another substantial round of chocolate price hikes. The estimated 2026 average selling prices for consumer chocolate companies are predicated on cocoa bean costs of about £4,000 to £5,000 per tonne, implying that current spot cocoa prices are improbable to spur additional price increases.

Barry Callebaut anticipates heightened promotional efforts in certain markets and potential modest price reductions for some products. With more stable or subtly lower chocolate prices, the company anticipates a revival in volumes after two to three years of price hikes, which dampened consumer demand.

Moreover, Barry Callebaut is directing more focus towards specialty solutions and premium products, coupled with broader regional decision-making across 10 key markets. UBS has kept a Neutral rating on Barry Callebaut, setting a price target based on a Discounted Cash Flow (DCF) approach at CHF1,180, which is roughly equivalent to the company’s current stock price of CHF1,125.

The analysts view the valuation as reflecting a balanced risk-reward profile, with the price target based on approximately 20 times estimated fiscal 2027 earnings.