Rising raw commodity prices and growing sustainability pressures are pushing chocolate and confectionery companies to pour funds into finding alternative ingredients for sweet treats.

Mondelez International, the maker of Oreo, was among the investors that participated in a $4.5m seed funding round for cell-based cocoa start-up Celleste Bio earlier this month, while British food ingredients company Tate & Lyle also announced that it has partnered with BioHarvest Sciences to develop sweeteners from synthetic plant-derived molecules.

The moves came as cocoa futures traded in New York rose above $10,000 a ton, continuing a confusing rally which started a year ago. At their peak in April, prices for the main chocolate ingredient topped $12,000 per ton, a nearly three-fold increase from January.

West African growers, who produce more than two-thirds of the world’s cocoafaces the double whammy of disease and adverse weather, driven by climate change, which has hampered production and deepened global seed shortages.

“If we don’t change how we source cocoa, we won’t have chocolate in two decades,” said Michal Beressi Golomb, chief executive of Celleste Bio. With cell-cultured cocoa, the industry “doesn’t have to rely on nature”, he added.

Global shortages and record prices are driving a surge of interest from chocolate and confectionery companies as well as investment, according to Golomb. “They are really concerned about a sustainable, consistent supply of quality cocoa,” he said. “Everyone wants to be part of the party.”

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

These innovations may also provide a solution to regulatory challenges, such as The new EU deforestation regulationwhich requires proof that commodities such as cocoa are not grown on deforested land, adding further pressure on supply chains and prices.

Other groups are looking at how to make sweet treats with alternative, more readily available raw ingredients. Last year Finnish confectioner Fazer launched a limited edition cocoa-free “chocolate” made from local malted rye and coconut oil. Since 2022, the Helsinki-based company has also collaborated with VTT, Finland’s state-owned research center, to grow cell-based cocoa pods.

“Almost four years ago, research told us that climate change will affect the availability and price of cocoa,” said Annika Porr from Fazer Confectionery’s Forward Lab. “This year it became a reality.”

Elsewhere, Cargill, the world’s largest agricultural trader, last year partnered with start-up Voyage Foods, which produces sustainable foods such as chocolate and nut spreads without their traditional cocoa ingredient. , peanuts and hazelnuts. It is made by using grape seeds, sunflower protein flour, sugar, fat, and natural flavors.

“Cocoa prices weren’t in the news when we started. Most people probably in the US or the UK can’t tell where cocoa is grown. And now, with prices rising, it’s easier to see why it should be,” said Adam Maxwell, CEO of Voyage Foods.

Consumers are looking for “more sustainable indulgence, that tastes great and is made without the nut or dairy allergens used in the recipe”, added Cargill.

While the price of sugar – whose production is not covered by EU rules – remains relatively stable, the industry is also facing increasing pressure to meet its environmental footprint and meet consumer demand for more healthy choice.

Tate & Lyle, once a sugar producer and now trying can be a sugar reduceris working with startup BioHarvest Sciences to develop synthetic sweeteners derived from plant cells.

BioHarvest Sciences has invested $100mn over the past 17 years to develop the technology, which extracts and then amplifies critical plant compounds that drive sweetness while suppressing bitter flavors.

The partnership will help Tate and Lyle distance itself from ultra-processed foods, for which it has drawn scrutiny from investors and scientists.

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

While the volatility of commodity markets may be driving investment in alternatives, growing ingredients in a laboratory rather than a tree or a farm 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 they are on the market and scale up production, said Golomb.

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

Breaking away from traditional commodity markets is also a war against red tape and shifting consumer expectations. Fazer Group’s cocoa-free bar, for example, cannot be called “chocolate,” instead being labeled “candy tablet” because of EU rules that reserve the name for products containing cocoa.

Cell-based cocoa faces a similar difficult regulatory maze, according to Porr, with “novel food” approval likely to be a higher climb in the EU compared to the US.

Winning over consumers can be just as challenging. Early research by the Fazer Group suggests that transparency about how cell-based cocoa is made can help influence public opinion, Porr said, but taste and texture are the ultimate tests. “Consumers expect it to taste and feel the same as traditional cocoa,” he said. “There’s still work to be done.”