Exclusive Article

Global confectionery and snack producers are grappling with historically unprecedented cost pressures on key ingredients.

Cocoa prices surged by almost 300% in 2024 before plunging in the second half of 2025. Meanwhile, tariffs and rising prices for sugar, dairy and nuts are squeezing margins across the value chain.

Recent US tariff hikes, sometimes reaching over 30% on exports of key ingredients, are rippling into MENA supply chains, increasing input costs for regional buyers who heavily source from affected markets.

For MENA-based manufacturers and retailers operating in an intensely competitive and price-sensitive environment, this presents both risk and opportunity.

Let’s explore how stakeholders are adapting strategically to such fluctuations.
 

According to JP Morgan Global Research, cocoa prices experienced major fluctuations in 2024, reaching over $12,000/tonne in late 2024 before tumbling by more than 30% by mid-2025, albeit maintaining a historic high price (just below $8,000/tonne) compared to previous years.

This volatility stems from patchy West African harvests, plant diseases, supply chain hiccups and now, global stock recovery efforts.

Even as prices ease, forecasts suggest supply constraints will keep costs high, particularly for businesses without agile procurement or flexible supplier networks.
 

Sugar

Though less volatile than cocoa, rising global tariffs and inflation are increasing sugar costs, especially significant in tariff-sensitive regions.

US tariffs, sometimes spiking to 31% for premium confectionery exports, have set a precedent, now rippling across countries in the MENA region, especially those sourcing sugar from abroad.
 

Dairy

Dairy prices in MENA are projected to hit $91.4 billion in 2025 and imports constitute a critical link. Governments, particularly in Saudi Arabia and the UAE, are now actively encouraging local dairy production.

How Brands are Absorbing (or Passing on) Costs

These spikes across key ingredients encourage manufacturers to either pass the price to consumers, cut promotional margins or find alternative sources. Sourcing from lower-tariff regions or switching to local producers and supply chains has become a strategic survival move.

Premium brands typically have a bit more wiggle room, where price increases can sometimes be justified with quality or exclusivity.

Mass-market players, though, are under pressure, with ingredient-led price hikes threatening to erode already slim margins. Some have resorted to shrinking pack sizes, reformulating recipes or hiking prices modestly, hoping brand loyalty will hold. This means more frequent promotions, flash deals and loyalty programs.

Innovation: Cut SKUs or Change What’s Inside?

Inflation is the ultimate innovation catalyst and sometimes, the end of the line for slow sellers. Confectioners are reassessing SKU portfolios, trimming underperforming variants and focusing on best-sellers with more price-stable ingredients.

Reformulation is also rampant as costlier cocoa is being replaced with compound chocolate, nuts are swapped for seeds and sugar alternatives are becoming more mainstream. This is especially visible in health-focused snacks or those chasing organic or clean-label certifications, which meet changing consumer preferences and also command higher price acceptance.

Distributor and Retailer Challenges

MENA distributors and retailers face their own balancing act: should they stockpile inventory in case prices climb higher or buy cautiously and risk shortages if costs surge? Buying during a spike can backfire if prices later fall, leaving importers and retailers with high-cost inventory that must be sold at lower market prices, eroding margins.

There’s also a risk of becoming outdated, as consumer tastes shift and global prices fluctuate. Smart retailers are investing in better forecasting technology, working closer with suppliers and building leaner supply chains. Businesses typically adapt to such situations by exploring more creative pricing strategies, dynamic discounting and occasional ‘out-of-stock’ surprises during festival seasons.

Building Resilience Through Local Sourcing

MENA’s shift towards local sourcing is a silver lining. Historically, the region has been heavily dependent on imports, making it vulnerable to price and supply chain volatility. GCC countries rely on imports for over 85% of their food needs, according to GourmetPro.

This is changing now as there is growing interest in localisation. From sourcing regional nuts or dairy to exploring ingredient innovations like date-based sweeteners or localised flavours, a variety of strategies are helping cushion global shocks while appealing to local tastes.
 

Regional players are leading the way:

• Dofreeze LLC, a Dubai-based global leader in long shelf-life packaged snacks with products sold across four continents, brings expertise in bakery snacking that meets international standards.
• Si Bonne LLC is recognised for its unwavering focus on quality, attention to detail and ability to adapt to customer needs, building long-lasting relationships and trust in the market.
• Amalfi Foods, a boutique Bahraini bakery inspired by Japanese confectionery delivers innovative, high-quality baked goods to prestigious patisseries without compromising on affordability or convenience.
   

Saudi Arabia’s Vision 2030 and the UAE’s food security initiatives are translating into real investment in cocoa alternatives, dairy farms and even local sugar beets. For example, Saudi-based companies like Almarai have invested heavily in expanding local dairy, bakery and even seafood operations. Similarly, UAE-based Pure Ice Cream is investing in a large facility in Dubai, one of the largest in the region, with a focus on local, premium production.

A Sweet Opportunity to Lead the Market

To explore these trends further, from exclusive showcases featuring next-gen products to networking with industry peers, join us at ISM Middle East, taking place from 15–17 September 2025 at Dubai World Trade Centre.

Register today and discover how leading brands and suppliers are responding to structural forces in real time and leave equipped with the knowledge and partnerships needed to take your business to new heights