Your favorite candy just got pricier, and it's not because of tariffs

Fast Company

4 days ago

If you're planning to roast s'mores over a campfire this summer, you'll be spending more than last year on one ingredient you can't skip.
Hershey plans to raise prices on its products to offset the cost of cocoa, a commodity that's been on a pricing rollercoaster of its own in the last two years. CBS News reports that the company will introduce a 'low double-digit increase' in prices across its products. Hershey owns many of the most popular candy brands in the U.S., including Reese's, Kit Kat and York, as well as non-chocolate candies like Twizzlers and Jolly Rancher. The price hike will likely go into effect within 90 days, though that timeline may vary.
Last year, the price of cocoa hit historical highs, soaring past $10,000 per metric ton. Cocoa prices began spiking at the beginning of 2024, doubling over the course of the year and tripling when looking back to late 2023. Over the last month, cocoa dipped well below its record highs, but still costs more than twice what it did two years ago.
Cocoa powder, used to make chocolate, comes from the seeds of the cacao tree, a water-intensive plant grown in tropical parts of Africa and South America. West Africa accounts for three quarters of the world's cocoa supply, with the Ivory Coast and Ghana being the world's top two cocoa-exporting nations.
With the global appetite for chocolate relying on a single region in Africa, cocoa is relatively vulnerable to forces outside of farmers' control – particularly climate-caused weather events worsening as the planet warms. The climate crisis is expected to cause accelerating agricultural losses for staple crops like corn and wheat around the globe, and cocoa is no different.
Excessive rainfall in late 2023 caused cacao pods to rot, one factor that sent the price of the commodity sky-high. Intense heat is also taking its toll on cocoa farming and cacao trees can struggle to produce pods when temperatures stretch above the plant's ideal range for days on end.
Less production means higher prices, though those effects might not have been fully felt by consumers right away. 'Pricing has yet to pick up meaningfully, but we expect this to accelerate potentially to the low-teens in 2025,' said Celine Pannuti, J.P. Morgan's Head of European Staples & Beverages said in a late 2024 report on the cocoa crunch. 'We see the chocolate market set for inflation largely unprecedented in recent history.'
Chocolate in a changing economy
Hershey says that its planned price increase isn't related to tariffs, but the company has identified tariffs as a threat to its business before. Cocoa can't be grown in the U.S., and must be imported, making it vulnerable not only to a changing climate, but to the whims of a president keen to inject chaos into global trade.
In May, Hershey was pursuing an exemption with the Trump administration that would allow the company to import its key ingredient without taking on new costs associated with tariffs. In an earnings call, the company estimated that Trump's tariffs would cost it between $15 and $20 million in the second quarter of the year. 'Absent tariff relief, this expense is expected to increase in the third quarter as we work through inventory on hand,' Hershey CFO Steve Voskuil said on the call.
Given that Hershey's prices will increase, the company likely did not secure an exemption for its cocoa imports – particularly since any conversation with Trump would likely come with threats against raising prices. Fast Company has reached out to Hershey for an update on its pursuit of a tariff exemption for its cocoa imports.
'As a largely domestic food producer, we are relatively less exposed to tariffs than other
Industries,' Hershey CEO Michele Buck said in May. 'That said, the current U.S. levy on cocoa is an exposure that we must manage on top of the cocoa market's unprecedented recent price swings.'
Cocoa might be more expensive now, but Hershey is optimistic about the future, noting in its last earnings call that cocoa supplies from the world's top three suppliers should be up by 20%. The spike in cocoa prices also led to a flurry of cocoa farming investment, a move that could improve yields in the future.
'There are reasons to believe that this year's crop marks the beginning of a multi-year growth cycle in cocoa supply,' Buck said. 'In the meantime, global end users are now responding to persistently high prices in earnest, having waited and watched for some time.'