Key Points:
- Hershey plans to increase candy prices by double digits due to unprecedented cocoa costs affecting top brands.
- The price hikes are unrelated to tariffs or trade policies.
- Although cocoa prices have decreased from record highs, they remain elevated compared to historical levels.
Insight:
With cocoa prices remaining high, several food companies are raising prices.
Lindt & Sprungli implemented a 15.8% price increase earlier this year, while Mondelēz International is considering similar actions for 2025. Hershey’s CEO, Michele Buck, stated that the company needs to pass on some inflation to consumers.
Chocolate candy makes up two-thirds of Hershey’s sales, while non-chocolate candy accounts for approximately 12%.
Although Hershey does not attribute the price increases to tariffs, the company requested an exemption for cocoa to avoid further price hikes due to trade wars.
Hershey anticipates tariffs costing between $15 million and $20 million in the second quarter as it depletes existing cocoa inventories.
Hershey has been diversifying into trendy food categories to become a snacking powerhouse, launching products with wafers and peanut butter to reduce reliance on cocoa. The company has also expanded into gummies, salty snacks, and other segments.
The acquisition of LesserEvil and the launch of Shaq-A-Licious XL Gummies demonstrate Hershey’s efforts to broaden its product offerings and reduce dependence on cocoa.
As the price of cocoa rises, interest in alternative chocolate options has grown, but challenges remain in terms of taste and consumer acceptance.