Last month, the world’s largest food company created a stir when it made a large bet on chocolate without cocoa.
Nestle Choco Crossies Snack vibes, the new product line from Nestle Choco Crossies, will be formulated in collaboration with Planet A Foods, an alt-chocolate innovator. This ingredient replaces conventional cocoa. The product, which is aimed at Gen Z customers in Germany, will be launched this month.
Nestle and other multinationals are constantly launching new products or expanding their existing product ranges. This is nothing new. The amount of money that depends on this launch is new.
Choco Crossies without cocoa will be a huge hit and open the door to new innovations in alt chocolate.
A flop, however, could be the death of this growing sector. Nestle’s bet is a make or break for cocoa free.
Nestle’s Alt Choc Bet is a “tortoise-and-hare” moment
Nestle’s decision to go cocoa-free was unique in many ways. Nestle is not only the largest food company in the world, but it was also the last confectionery giant to invest alternative cocoa.
The multinational, in true “tortoise-and-hare” style, has risen from the back to be the first of its peers to introduce a cocoa free ‘chocolate.’
You can also read: Nestle’s bet on cocoa free chocolate
Since years, chocolate manufacturers have publicly backed chocolate alternatives. Barry Callebaut collaborates with scientists in order to create cocoa grown from cells, and also distributes cocoa-free products. Mondelez International is also funding the development of cell-based cocoa butter, and Cargill supports innovations that are similar to chocolate, but made from sunflower kernels or grape seed paste.
Nestle was also quietly testing and trialling products with Planet A Foods, even though it appeared to be passing on the cocoa free movement. Nestle Germany had been discussing the launch of its sunflower seed-based cocoa-free ChoViva product with Planet A Foods for “three or four years”.
What the industry can expect from a successful launch of cocoa-free products
Nestle’s new line is a big deal because it’s the first confectionery company to launch a permanent, cocoa-free product.
It also means that the success of this product is very important. Nestle Choco Crossies are aimed at Gen Z, and if they succeed in capturing this market, then other major brands will be more inclined to experiment with cocoa-free products.
Nestle has a lot at stake with the launch of its cocoa-free Choco Crossies Snack Vibes. (Image: Nestle)
As the market grows, so do start-up revenues. And as orders are placed, cocoa-free innovators will be valued higher. Venture capitalists who invested in the next generation of food ingredients can now breathe a big sigh: their bet paid off.
The next step could be an exit, whether through FMCG integration on the stock exchange or an IPO.
Success for cocoa producers would be more than just financial. As more and more companies incorporate cocoa free ingredients in their product formulas, cocoa supply chain resilience increases. The cocoa industry has been vulnerable in recent years, as it was hit by both price increases and decreases. Diversifying the supply is key to ensuring future supply. This could mean sourcing from multiple regions or even different countries.
If consumers are willing to buy cocoa-free products, this is a win for the environment, business and shoppers.
Some launchers are more risky than others
What if it fails? Nestle would be disappointed if the product failed.
Nestle has invested heavily in R&D and new packaging to get the product on shelves.
A company that sells $14bn of confectionery each year can easily absorb this loss.
Chocolate makers have begun to use cheaper substitutes, such as chocolate bars. “chocolate compound coating” (Image: Getty/Deagreez) (Image: Getty/Deagreez)
Nestle’s new Choco Crossies may not be a hit with consumers, but the bigger question is what will happen to cocoa-free “chocolate”. Investor confidence could be waning and manufacturer interest may also have a negative impact on the category.
Cocoa prices will rise in a world of disease and climate instability, where supply chain resilience is still a challenge.
As cocoa prices rise, chocolate makers will likely turn to less expensive ingredients like “compound coating”. This is already happening.
It’s the right time to make or break cocoa-free products. Nestle’s small extension of its German line represents a big bet made on the future. Nestle is a brand that everyone wants to see succeed.