Investors in Mondelēz International and Hershey are keeping close eye on how the chocolate makers react to the ongoing rise in cocoa and sugar prices, as they report first-quarter results this week.

Mondelēz – the maker of Cadbury and Oreo – and Reese's Peanut Butter Cups maker Hershey have been dealing with high cocoa costs for almost a year, which in most part they have passed on to consumers by raising prices.

But a recent surge in cocoa prices – allied to falling cocoa supplies due to drought and crop disease in the world's top cocoa producing countries – could spell further trouble.

Compounding these issues, sugar prices have also increased in recent months.

In the run-up to Easter, soaring cocoa and sugar prices saw chocolate makers promoting non-chocolate products such as biscuits, as shoppers baulked at the high price of chocolate.

Cocoa prices have tripled over the past 12 months, following ongoing bean disease in West Africa. Cocoa farmers there have been hit by several plant diseases that are ruining crops on a vast scale and pushing up the global price of cacao – the raw material for making chocolate – to record levels.

Fungal black pod disease is just one of many affecting farmers, caused by months of wet weather. Another major problem in Ghana and Ivory Coast is cocoa swollen shoot virus, which is spread by insects.

Together, Ivory Coast and Ghana supply more than half of the world’s demand for cocoa.

Speaking to Reuters, Sean King an Analyst at Mondelēz and Hershey shareholder, Columbia Threadneedle Investments, said: "A lot of investors are waiting to learn about how the consumer is reacting to the current price of chocolate in the market and how that influences the companies' decisions to take more pricing in the future.

Cocoa prices have almost tripled this year, and now account for 20% and 10% of Hershey and Mondelez's cost-of-goods-sold (COGS), respectively, says Jefferies.

Mondelēz CoLab Tech R&D accelerator program open for second year

In other Mondelēz news, the company is now seeking out early-stage companies who are developing innovative technologies in nutrition, ingredients, packaging, and sustainability. 

The CoLab Tech accelerator program is led by Mondelēz’s global R&D team and it plays an important role in the company’s growth strategy across in its core categories of chocolate, biscuits, and baked snacks 

Successful applicants will provide Mondelēz’s R&D team with early access to new capabilities that can help in the development of breakthrough products and platforms in the areas of packaging, ingredients and sustainability.

“Our R&D team is at the forefront of Mondelēz’s commitment to empowering people around the world to snack right,” said Ian Noble, Mondelēz R&D VP. 

“As consumers increasingly prioritise personal well-being, planet positive choices, and more interesting eating experiences, we need to look to groundbreaking entrepreneurs who have developed new tools and technologies that enable us to continue leading the future of snacking.”

CoLab Tech Program Manager Paula Hemerly said the first year’s cohort “has already demonstrated the value of big and small working together to accelerate the promise of food technology”.