Global (Page 71)

The global chocolate industry is undergoing one of its most consequential structural resets in decades, as extreme volatility in cocoa prices forces the world’s largest confectionery companies to rethink sourcing, pricing, and product composition—all while consumers continue to face elevated prices at the register.

Cocoa futures, which surged to a record $12,931 per metric ton in late 2024, have since fallen more than 70%, stabilizing in the $5,000 to $6,000 range in early 2026. Despite the sharp decline, prices remain well above historical norms, leaving manufacturers navigating a fundamentally altered cost environment. The volatility—driven by poor harvests in West Africa, climate disruptions, disease, and years of underinvestment—has exposed deep structural vulnerabilities across the cocoa supply chain.

“The scale of the shock changed how companies think about cocoa entirely,” industry analysts note, pointing to a shift from short-term hedging strategies toward long-term supply resilience. Cocoa’s role extends far beyond chocolate bars, feeding into bakery products, snacks, dairy, and beverages—meaning pricing disruptions ripple across the broader food economy.

For The Hershey Company (NYSE: HSY), the response has centered on tightening hedging strategies while expanding sourcing flexibility. Chief Financial Officer Steve Voskuil told investors the company has strengthened its commodities governance framework, combining derivatives, market intelligence, and structured oversight to manage volatility. “We have very good visibility into our cost basket, including cocoa, albeit at significantly higher pricing levels than prior years,” Voskuil said, adding that hedging allows Hershey to cap downside risk while maintaining upside exposure if prices fall.

At the same time, Hershey has quietly adjusted certain product formulations. Some seasonal and specialty items have shifted away from traditional milk chocolate toward alternative coatings using sugar and vegetable oils, a move that has sparked consumer backlash. The company has defended its core products, particularly Reese’s Peanut Butter Cups, while acknowledging ongoing experimentation across its portfolio.

Despite the controversy, Hershey has outperformed peers. The company’s latest earnings beat expectations, sending shares higher and supporting a stronger outlook for 2026. Analysts note that Hershey has managed to maintain elevated retail prices even as input costs began to ease—effectively preserving margins in a way reminiscent of previous commodity cycles.

In contrast, Mondelēz International (NASDAQ: MDLZ) has faced a more constrained recovery. Although the company exceeded earnings estimates, its shares declined after management issued a cautious outlook. Analysts point to longer-duration cocoa hedges as a key factor limiting its ability to benefit from falling prices. Chief Executive Officer Dirk Van de Put emphasized that consumer demand for chocolate remains resilient but signaled that pricing pressure could persist. “For sure, cocoa prices will remain higher than they’ve been in the past, but they will come down eventually from the current high,” Van de Put said.

Across Europe, reformulation trends are accelerating. Nestlé S.A. (SWX: NESN) removed the legal designation of “chocolate” from certain products in the UK after reducing cocoa content below regulatory thresholds, relabeling them as “chocolate-flavored” coatings. Pladis Global, the maker of Penguin and Club bars, has taken similar steps. These changes have triggered backlash from consumers, with critics arguing that the industry has moved beyond shrinkflation into ingredient substitution.

“Chocolate manufacturers are looking for ways to decrease the impact of supply challenges, quality fluctuations, and volatile cocoa pricing,” said Billy Roberts, Food & Beverage Economist at CoBank. “But such moves have not been without controversy, whether from taste changes or negative public perception.”

Retail data underscores the disconnect between commodity prices and consumer experience. Despite the sharp drop in cocoa futures, chocolate prices in U.S. stores continued to rise into early 2026. Datasembly reported a 14.4% year-over-year increase in shelf prices during the opening weeks of the year, reflecting the lag effect of higher-cost inventories and sustained pricing strategies by manufacturers.

The most significant structural shift may be unfolding at the supply chain level. Barry Callebaut AG (SWX: BARN), the world’s largest chocolate producer, is reportedly exploring options to separate its cocoa trading and processing business from its chocolate manufacturing division. Potential scenarios include a spin-off, joint venture, or sale, according to people familiar with the matter. The move would mark a major departure from the integrated model that has long defined the industry. Shares in Barry Callebaut surged following reports of the potential restructuring.

The concentration of the cocoa market adds urgency to these discussions. Just three companies—Barry Callebaut, Cargill Inc., and Olam Group Ltd. (SGX: VC2)—control an estimated 60% to 70% of global cocoa grinding capacity, giving them outsized influence over supply dynamics. Their scale-driven model, built on predictable sourcing and cost efficiency, has been strained by the unprecedented volatility of recent years.

In response to growing pressure at the farm level, major industry players are also turning toward collective action. In February, companies including Mars Inc., Mondelēz, Nestlé, Hershey, and Lindt & Sprüngli AG (SWX: LISN) launched TogetherCocoa, a joint initiative aimed at improving farmer incomes and stabilizing production in Côte d’Ivoire and Ghana—the world’s two largest cocoa producers. “We are working closely with governments and supply chain partners to address long-term sustainability challenges,” said Todd Scott, Senior Communications Manager at Hershey.

The initiative reflects a broader acknowledgment that the root causes of cocoa volatility—aging tree stock, climate stress, farmer poverty, and lack of reinvestment—cannot be solved through financial hedging or product reformulation alone. With more than 90% of global cocoa produced by smallholder farmers, many of whom face declining yields and economic pressures, the long-term outlook for supply remains uncertain.

For consumers, the implications are clear. Even after a dramatic collapse in commodity prices, retail chocolate costs are unlikely to fall significantly in the near term. Companies that absorbed higher costs through price increases have little incentive to reverse them quickly, particularly as structural risks in the supply chain persist.

The result is a new reality for the global chocolate market—one defined by higher baseline prices, evolving product formulations, and a supply system still under strain. Whether this reset ultimately stabilizes the industry or introduces a new era of volatility will depend on how effectively companies—and governments—address the deeper structural challenges now laid bare.

JBizNews Desk

Trump’s Next Tariff Wave Begins Tomorrow: USTR Hearings Open On New Section 301 Duties As Radio Flyer, American Manufacturers Brace For Impact

April 27, 2026 | JBizNews Desk

The Trump administration’s trade strategy enters a new and more durable phase this week, as the U.S. Trade Representative (USTR) opens the first in a series of public hearings that will shape the next generation of American tariffs — this time built on legal authority that has already withstood judicial scrutiny.

The hearings, scheduled for April 28 and May 5, follow a major U.S. Supreme Court ruling in February that struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Writing for the majority in a 6–3 decision, Chief Justice John Roberts ruled that “the power to impose tariffs rests with Congress alone,” forcing the administration to rebuild its trade framework.

Now, that replacement is taking shape under Section 301 of the Trade Act of 1974 — a far more established and court-tested authority.

From Emergency Powers to Permanent Policy

In response to the court ruling, the administration quickly invoked Section 122 to impose a temporary 10% global tariff — a stopgap measure limited to 150 days — while launching sweeping Section 301 investigations targeting practices across more than 75 countries.

Those investigations focus on two core issues: failures to prevent forced labor in supply chains and structural overcapacity in global manufacturing. Unlike IEEPA, Section 301 provides a clear legal pathway for tariffs, with no statutory cap on rates and no expiration timeline, making it significantly harder to challenge in court.

Trade experts note that Section 301 was the same mechanism used to impose tariffs on China during Trump’s first term — measures that remain in place today at rates ranging from 7.5% to 100% on many goods.

Analysts at the Peterson Institute for International Economics say the current investigations are intentionally broad, covering an estimated 99% of U.S. imports, effectively replicating — and potentially expanding — the reach of the previous tariff regime under stronger legal footing.

The “Radio Flyer” Effect on Everyday Business

The real-world implications are already coming into focus.

Industry observers have pointed to Radio Flyer, the iconic American wagon brand, as a clear example of how deeply the new tariffs could reach into consumer markets. While the brand is American, much of its manufacturing is based overseas — particularly in China — making it highly exposed to sustained import duties.

For companies like Radio Flyer, the shift to Section 301 tariffs represents more than a temporary cost increase. It signals a long-term restructuring of supply chains, where sourcing decisions made decades ago may no longer be economically viable.

With limited short-term alternatives, many businesses face difficult choices: absorb higher costs, pass them on to consumers, or invest heavily in shifting production.

Hearings That Will Shape the Outcome

The hearings opening tomorrow will play a critical role in determining how these tariffs are applied. The USTR has already requested consultations with governments across dozens of countries, and companies have submitted written comments outlining the potential economic impact.

The first hearing, beginning April 28, will focus on forced labor enforcement, followed by a second session on May 5 addressing global manufacturing imbalances.

Businesses that participate will have a chance to influence how tariffs are structured — including which industries are targeted and at what rates.

The $160 Billion Legal Fallout

At the same time, the administration is dealing with the financial consequences of the Supreme Court’s earlier ruling.

More than 2,000 lawsuits have been filed by companies seeking refunds for tariffs previously collected under IEEPA, with total claims estimated between $160 billion and $175 billion.

U.S. Customs and Border Protection (CBP) is currently developing a system — known as the Consolidated Administration and Processing of Entries (CAPE) — to manage potential refunds, though no timeline has been announced.

Trade advisors are urging companies to pursue claims through both litigation and administrative channels, as the process remains uncertain.

Despite the legal challenges, Treasury Secretary Scott Bessent has indicated the administration intends to maintain overall tariff revenue levels by combining multiple authorities, including Sections 122, 232, and 301 — ensuring that even if refunds are issued, the broader tariff structure remains intact.

A Structural Shift for U.S. Business

For American companies, the message is increasingly clear: tariffs are not being rolled back — they are being rebuilt.

What began as a contested use of emergency powers is now evolving into a long-term trade framework grounded in established law, with the potential to reshape global supply chains and pricing structures for years to come.

As the hearings begin, businesses across sectors — from manufacturing to retail — are preparing for a future where tariffs are not a temporary disruption, but a permanent feature of the economic landscape.

The companies that engage now may help shape that future. Those that do not may find themselves adapting to it.

— JBizNews Desk