Hershey Plans Double-Digit Candy Price Increase Due to Rising Cocoa Costs
Hershey, the renowned confectionery giant, is gearing up to implement significant price hikes on its candy products as a result of soaring cocoa prices that are impacting many of its popular brands. The company recently informed retailers about the impending price adjustments, emphasizing that the decision is not linked to tariffs or trade policies.
Although cocoa prices have slightly decreased from their peak in December, they still remain elevated compared to historical levels. This persistent high cost of cocoa has prompted several food companies, including Lindt & Sprungli and Mondelēz International, to raise their prices as well.
According to Michele Buck, Hershey’s CEO, the company has already absorbed a considerable amount of inflation but believes that passing on some of the cost to consumers is necessary. Chocolate candy constitutes a significant portion of Hershey’s sales, with non-chocolate candy also contributing to a considerable extent.
Despite not citing tariffs as the direct cause of the price hikes, Hershey remains concerned about the potential impact of escalating trade tensions on chocolate prices. In fact, the company sought an exemption for cocoa from tariffs in order to mitigate the risk of further price increases.
Aside from adjusting its pricing strategy, Hershey has been actively diversifying its product portfolio to reduce its reliance on cocoa. By expanding into categories such as wafers, peanut butter, gummies, and salty snacks, the company aims to establish itself as a dominant player in the snacking industry.
Furthermore, Hershey’s recent acquisition of LesserEvil, a producer of organic snacks, and the launch of Shaq-A-Licious XL Gummies demonstrate its commitment to expanding beyond traditional confectionery products. This strategic shift not only broadens Hershey’s presence in the snacking market but also helps mitigate the risks associated with fluctuations in commodity prices like cocoa.
As the cost of cocoa continues to impact the industry, alternative chocolate options have emerged, offering ingredient suppliers the opportunity to provide substitutes for baking and confectionary applications. However, challenges related to taste and consumer acceptance remain hurdles for widespread adoption by major consumer packaged goods companies.