Mondelez Brings Cocoa Crumb Production In-House at Malaysian Plant

Vertical Integration in Response to Cost Pressure

Mondelez International has brought cocoa crumb production to its Cadbury confectionery facility in Shah Alam, eliminating the need to import the key ingredient from Australia or South Africa. The company invested RM90 million in a dedicated Crumb Tower that now operates alongside existing chocolate liquid production at the same site.

Simon Crowther, managing director for Malaysia and Singapore at Mondelez International, said the facility allows both chocolate liquid and cocoa crumb to be made on-site before they are combined into finished chocolate products. The change gives the company direct control over a raw material that previously required long-haul shipping from two continents.

Cocoa crumb is a blend of cocoa, milk and cocoa butter. It is mixed with chocolate liquid and then moulded into bars such as Cadbury Dairy Milk. By producing crumb locally, Mondelez shortens its supply chain and reduces exposure to logistics disruptions that have affected commodity imports across Southeast Asia.

Cocoa Prices and West African Concentration

Crowther said cocoa prices have recorded triple-digit growth over a multi-year period, creating significant pressure for manufacturers that depend on the commodity. He declined to discuss profit margins or product pricing but acknowledged the past three years have been particularly challenging for anyone working with cocoa.

London cocoa futures fell to a near three-year low on 27 February, but the outbreak of the United States-Iran conflict at the end of that month reversed the trend. Futures rose by as much as £2,747, or 136 per cent, to £4,773 on 9 July from the start of the war. The price has since eased to £4,314, leaving the year-to-date gain at 1.55 per cent from £4,248 on 2 January. That figure remains 17.3 per cent below the £5,216 level recorded a year earlier.

The volatility reflects broader risks in cocoa supply. Crowther said approximately 80 per cent of global cocoa is grown in Ivory Coast and Ghana, meaning chocolate makers remain heavily exposed to weather, disease and policy developments in those two West African countries. Mondelez sources its cocoa from the region before shipping it to Malaysia for processing and refinement.

Broader Inflation and Logistics Costs

The escalation of the US-Iran conflict has also pushed Brent crude futures above US$100 per barrel, raising concerns over shipping and transportation costs. Brent crude closed at US$108.47 on Tuesday, up 19.6 per cent from US$90.68 on 31 August. Higher fuel costs add another layer of expense for manufacturers that rely on imported raw materials and export finished goods across the region.

For Mondelez, the challenge is managing rising input costs without pricing consumers out of the market. Crowther said the company is working to preserve affordability rather than simply passing higher costs through to retail prices. He noted that consumers want to buy the brand and expect certain price points for an everyday treat.

Pack Size Adjustments and Price Architecture

To maintain accessibility, Mondelez has been adjusting pack sizes and product offerings. Crowther said the company tries to ensure products are available at the right price points, allowing consumers to choose smaller, more affordable packs. This approach gives Mondelez flexibility to respond to elevated cocoa costs while retaining a range of price points across its portfolio.

The Shah Alam facility now handles both the production of chocolate liquid and the production of cocoa crumb, reducing the company's reliance on imported crumb and giving it greater control over an important stage between the raw cocoa bean and the finished bar. The investment comes as manufacturers across Asia seek to shorten supply chains and reduce exposure to commodity volatility and logistics disruption.