Hershey’s Candy Price Increase Driven by Soaring Cocoa Costs
In response to unprecedented cocoa prices, Hershey Co., the iconic maker of beloved candies like Hershey’s chocolates and Reese’s Peanut Butter Cups, has announced a significant price increase. This decision, communicated to retailers last week, entails an approximate double-digit rise in prices, reflecting not only higher list prices but also adjustments in the size and quantity of confections. This strategy, known as shrinkflation, is a growing trend among companies facing inflated ingredient costs.
Hershey’s price hikes are clearly tied to rapidly escalating cocoa costs, a reality that’s been exacerbated by supply shortages stemming from diseases and adverse weather conditions in key producing countries. Ivory Coast and Ghana, which collectively provide over 60% of the global cocoa supply, have been particularly hard-hit, causing cocoa futures to more than double in price. Despite a recent easing in cocoa futures as global production rebounds and demand forecasts soften, current costs remain significantly higher than historical averages.
Andrew Archambault, the president of U.S. confection at Hershey, emphasized that these changes are not influenced by tariffs or trade policies but are directly related to ingredient expenses. His assertion reflects the pressures many food manufacturers face as they navigate a landscape marked by fluctuating prices. Hershey had already implemented a price increase a year ago, indicating that the ongoing cocoa crisis is a persistent challenge for the industry.
The broader chocolate market is feeling the strain as well. Notably, Swiss chocolatier Lindt & Sprüngli AG recorded a remarkable 15.8% price increase in the first half of the year, with its CEO anticipating continued inflation for cocoa in 2026. This trend suggests that consumers should prepare for potentially higher prices across various confectionery products as chocolate makers grapple with these elevated input costs.
Additionally, Hershey Co. is contending with tariff-related expenses, particularly concerning tinplate steel and aluminum. The company projected that tariff costs could reach between $15 million and $20 million in the second quarter alone. In light of these challenges, Hershey has also sought a tariff exemption from the U.S. government concerning cocoa imports, expressing optimism about a favorable outcome.
As the confectionery landscape evolves in response to these economic pressures, consumers may need to adjust their expectations around pricing and product availability. The combination of soaring cocoa prices, ongoing tariffs, and changes in product dimensions signifies a potential shift in consumer habits and spending in the sweets market. Hershey and its competitors are bracing for a challenging future, but their commitment to quality and adaptability will be crucial in navigating these turbulent waters.
In conclusion, Hershey’s strategic responses to the dual challenges of rising cocoa costs and tariffs offer a glimpse into the ongoing evolution of the candy industry. As these economic forces shape pricing and product offerings, it’s essential for both companies and consumers to remain vigilant and informed about the changing dynamics of confectionery products.
