In my world, chocolate and coffee are two of the main substances that make life worth living. So it’s a big deal to see tighter supplies and higher prices for both commodities.
Chocolate lovers in particular felt sticker shock this year after a December surge in cocoa prices prompted confectionary makers to charge more for their treats. Higher costs come as Ghana and Côte d’Ivoire, the West African nations that provide most of the world’s cocoa supply, face deteriorating yields due to crop disease and climate change.
Coffee addicts see a similar scenario unfolding. Prices are hitting all-time highs on commodity markets, making it costlier to satiate morning caffeine cravings. Contributing factors to the price surge include rising global demand, poor harvests, tariffs and geopolitical tensions.
It’s a bleak picture overall. However, one bit of bright news is that startups are working on some potentially viable alternatives. These involve substitutes for the real thing as well as strategies to more reliably and sustainably source coffee and cocoa.
VCs pour in hundreds of millions
More than a dozen startups innovating in these areas have raised funding in the past couple years, collectively pulling in over $300 million to date, per Crunchbase data. A big chunk of that has come in the past year, as growing shortages and pricing pressures have escalated.
Coffee is the biggest area for funding. To illustrate, we used Crunchbase data to put together a list of 11 companies working on coffee substitutes or sustainability-focused businesses.
Cocoa isn’t too far behind. Two companies on our coffee list — Voyage Foods and Food Brewer — also have chocolate offerings. In addition, a handful of other companies are focused more closely on chocolate alternatives:
Big fundraisers feeding our addictions
Most investment to the alternative coffee and cocoa space has gone to two companies: Voyage Foods and Planet A Foods.
Oakland-based Voyage Foods, which has a lineup of plant-based foods that includes cocoa-free chocolate and bean-free coffee, is the more heavily funded of the two. The 4-year-old company has raised $117 million to date, locking up a $52 million Series C last May.
Voyage’s focus is on creating allergen-free, more sustainably produced versions of popular food and drinks, like coffee, chocolate and peanut butter. Its process involves studying foods at the microscopic level to identify what compounds produce the flavors we love, and then recreating them with different, more widely accessible ingredients.
Munich-based Planet A Foods is another strong fundraiser, pulling in $73 million to date, including a $30 million December Series B. The company is best known for a cocoa-free chocolate called ChoViva, produced with sunflower seeds and vegetable oils.
Others have also raised good-sized rounds, including Zurich-based Food Brewer, a maker of cell culture-based cocoa and coffee, which has raised $11 million.
Another one to watch is Atomo Coffee, based in caffeine-loving Seattle, which makes a beanless coffee with ingredients including date seeds, sunflower, guava and lemon. And for those looking for actual coffee, Colombia-based The Green Coffee Co. sells sustainably grown beans that it says are “traceable from farm-to-cup.”
These are huge markets
In case anyone was wondering, people spend tons of money on coffee and chocolate.
In the U.S. alone, consumers spend more than $300 million on coffee products every day, which adds up to nearly $110 billion annually, per the National Coffee Association. Each week, more than 70% of American adults drink coffee, making it the country’s favorite beverage after bottled water.
Chocolate confectionary, meanwhile, represents a roughly $140 billion global market, with plenty of growth ahead. In the U.S., for instance, confectionary sales broke records last year, with more than half of that going to chocolate treats.
These are huge markets for startups to potentially tap. For those working on alternatives, it helps that some of that spending is discretionary, with consumers willing to substitute something else if their morning coffee or chocolatey dessert is too expensive or unavailable.
But among us hardcore coffee and chocolate lovers, few plan to voluntarily give up our favorite indulgences. If we are going to try an alternative, it better be pretty darn close to the real thing.
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Illustration: Dom Guzman
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