Hershey says it is hiking chocolate prices
Hershey told its retail partners it is raising prices by a percentage in the 'lower double-digit range' over what its chocolate products cost over the past couple years, a company spokesperson confirmed to CNN. The culprit: high cocoa prices.
Bloomberg first reported the increase.
Cocoa futures rose a whopping 178% in 2024 after a 61% increase in 2023, according to data from FactSet. That's because Ghana and Ivory Coast account for almost 60% of the world's cocoa production, and the region has been hit by poor harvests due to weather exacerbated by climate change.
For example, a study led by Maximillian Kotz of the Barcelona Supercomputer Center found an early 2024 heat wave hit there was made 4 degrees Celsius hotter due to climate change. Cocoa prices that April soared 280%.
Cocoa futures are currently trading for $8,156 per metric ton. Although that's 30% lower than the record high of $12,646 per metric ton in December 2024, it's still significantly higher than it was two years ago.
Hershey noted in its statement that the price increase is not related to tariff or trade policies. In its earnings call in May, Hershey said it anticipated $15 million to $20 million in tariff costs in the second quarter of the year.
The price increase 'reflects the reality of rising ingredient costs including the unprecedented cost of cocoa. (For years,) we've worked hard to absorb these costs and continue to make 75% of our product portfolio available to consumers for under $4.00,' a company spokesperson said.
In its earnings call in May, the company said it would also adjust its 'price pack architecture,' which basically means reducing the amount of product in a package, more colloquially known as 'shrinkflation.'
The benefit of this is 'it's not a direct price point increase, but rather, it's kind of a combination of sizing and price, which can tend to offer perhaps a better value perception for consumers,' Michele Buck, Hershey's CEO, said in an earnings call in May.
Swiss chocolatier Lindt said in 2024 that it raised its prices and expected to continue into 2025, due to a 'challenging year characterized by record-high cocoa costs, substantial price increases, and weakened consumer sentiment.'
John Towfighi, Lianne Kolirin and Erika Tulfo contributed to this report.
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