Dive Brief:
- Hershey is planning to raise candy prices by double digits as the confectionery giant faces an “unprecedented cost of cocoa” impacting many of its top brands.
- The Reese’s and Hershey’s Kisses manufacturer told retailers last week about the price increases, a spokesperson said. The hike is not related to tariffs or trade policy, they added.
- While cocoa prices have eased from their record high in December, they remain elevated compared to their historical norms.
Dive Insight:
With cocoa remaining stubbornly high, multiple food companies have moved to raise prices.
Swiss chocolate giant Lindt & Sprungli passed along a 15.8% price increase in the first half of the year. Toblerone and Milka manufacturer Mondelēz International also warned of similar action in 2025. Michele Buck, Hershey’s CEO, said in August 2024 that the business has “absorbed a lot of inflation already, but we do believe we need to pass some of it on.”
Chocolate candy accounts for two-thirds of Hershey’s sales, The Wall Street Journal noted, citing an April analysis by TD Cowen, while nonchocolate candy accounts for about 12%.
While tariffs are not highlighted by Hershey as the reason for the price increases, they remain a hot topic for cocoa users. Hershey asked the White House in May to exempt cocoa from tariffs as an escalating trade war could push chocolate prices even higher.
The company told investors it expects tariffs to cost between $15 million and $20 million during the second quarter as it works through existing cocoa inventories.
Hershey has been aggressively expanding its reach into other trendy food categories to meet Buck’s vision of turning the company into a “snacking powerhouse.” Some of the company’s newer launches include products with wafers and peanut butter that also help lessen its dependence on cocoa.
Hershey has also been extending deeper into gummies, salty snacks and other categories.
In April, it announced the purchase of LesserEvil, a maker of organic snacks like popcorn, puffs and curls, and last year launched Shaq-A-Licious XL Gummies. The shift not only gives Hershey more exposure across the snacking landscape but also helps minimize its exposure to a single commodity, such as cocoa.
The price of cocoa has also driven interest in alternative chocolate options, with ingredient suppliers releasing substitutes that can be used in the baking or confectionary industries. However, taste and consumer perception of these products remain headwinds for buy-in from major CPGs.
