Hershey to increase candy prices by double digits as cocoa costs rise

The Hershey Company announced on Tuesday that they will be increasing candy prices in response to the rising costs of cocoa. The price hike, described as a “low double-digit increase,” will impact various products within the company’s confection portfolio, which includes popular brands like Hershey Kisses, KitKat, Reese’s, and York. This adjustment is not related to tariffs or trade policies but is a direct result of the escalating costs of ingredients, particularly cocoa.

According to a Hershey spokesperson, the price increase typically takes around 90 days to come into effect, although the exact timing may vary depending on the retailer. The surge in cocoa prices can be attributed to a global cocoa shortage, with the commodity price reaching $8,402 in June, marking a significant 73% increase over the past five years.

The majority of the world’s cocoa supply comes from countries like Ghana and the Ivory Coast, which have been impacted by extreme weather conditions like heatwaves and heavy rain due to climate change. These factors have led to the spread of diseases like Black pod rot, which has devastated cocoa crops. Additionally, chronic underinvestment in cocoa farms has contributed to the spike in cocoa prices, as highlighted in a report from J.P. Morgan Global Research.

In response to the challenges posed by the inflation of cocoa prices, The Hershey Company has expressed its intention to focus on products that are less cocoa-intensive. Michele Buck, the president of the company, emphasized the importance of expanding into new product categories such as sweets, better-for-you options, and salty snacks to attract new consumers and increase market share.

Following the announcement of the price increase, Hershey’s share prices saw a 2.8% increase after the closing bell on Tuesday. The company’s strategic shift towards diversifying its product offerings reflects its commitment to adapting to market challenges and maintaining its position as a leading player in the snacking industry.

As Hershey navigates the impact of rising cocoa costs, the company’s decision to adjust prices and explore new product opportunities underscores its proactive approach to sustaining growth and profitability in a competitive market landscape.