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Hershey says it is hiking chocolate prices | CNN Business

Hershey Announces Chocolate Price Hike Amid Soaring Cocoa Costs

In a move that underscores the mounting pressures facing the global confectionery industry, Hershey Company has revealed plans to increase prices on its iconic chocolate products starting later this year. The announcement, made public on Tuesday, comes as the Pennsylvania-based candy giant grapples with unprecedented rises in raw material costs, particularly cocoa, which has seen its prices skyrocket due to supply disruptions in key producing regions. This development is likely to ripple through grocery aisles and consumer budgets, adding to the inflationary squeeze many households are already feeling on everyday indulgences.

Hershey, known for beloved brands like Reese's Peanut Butter Cups, KitKat (in the U.S.), and its namesake chocolate bars, stated that the price adjustments will affect a broad range of its portfolio. According to company executives, the increases will average around 7% to 9% across various items, though some products could see hikes as high as 11% depending on size and format. The changes are slated to take effect in the fourth quarter of 2025, aligning with the holiday season when chocolate demand typically peaks. This timing could amplify the impact, as families stock up for Halloween, Thanksgiving, and Christmas festivities.

The primary driver behind this decision is the volatile cocoa market. Cocoa prices have more than doubled over the past year, reaching historic highs not seen in decades. Factors contributing to this surge include adverse weather conditions in West Africa, which produces about 70% of the world's cocoa supply. Countries like Ivory Coast and Ghana have been hit hard by excessive rainfall, leading to crop diseases such as black pod and swollen shoot virus, which have decimated yields. Additionally, aging cocoa trees and a lack of investment in farming infrastructure have exacerbated shortages. Hershey's chief financial officer, speaking during an earnings call, emphasized that these aren't short-term blips but structural issues that could persist for years.

Beyond cocoa, Hershey is contending with a confluence of other cost pressures. Sugar prices have also climbed due to global supply chain disruptions and trade tensions, while transportation and labor costs have risen amid ongoing inflation. The company has already implemented efficiency measures, such as optimizing supply chains and investing in sustainable sourcing, but these haven't fully offset the financial strain. In fact, Hershey reported in its latest quarterly filing that input costs rose by 15% year-over-year, squeezing profit margins despite steady sales volumes.

This isn't the first time Hershey has resorted to price increases. Back in 2023 and 2024, the company enacted similar hikes, averaging 5% to 7%, in response to post-pandemic supply chain chaos and the initial waves of cocoa price volatility. Those adjustments helped stabilize earnings but drew criticism from consumers who felt the pinch at checkout. Now, with this latest round, industry analysts predict a potential backlash, especially as economic uncertainty looms with interest rates remaining elevated and household disposable income under pressure.

Consumer reactions have been swift and varied. Social media platforms are buzzing with frustration, with some users vowing to switch to cheaper alternatives or cut back on chocolate altogether. "Hershey's was my go-to treat, but at these prices, I'll stick to generics," one Twitter user lamented. Others, however, express understanding, acknowledging the global factors at play. A survey by market research firm NielsenIQ suggests that while 60% of U.S. consumers are willing to pay more for premium chocolate, budget-conscious shoppers—particularly families and low-income households—may reduce purchases, potentially leading to a 3% to 5% dip in overall category sales.

Hershey isn't alone in this predicament. Competitors like Mars, Incorporated, which owns Snickers and M&M's, and Swiss giant Nestlé, producer of Butterfinger and Crunch bars, have also flagged impending price adjustments. Mars recently announced a 6% increase on select products, citing the same cocoa crunch, while Nestlé has been more aggressive in some markets, hiking prices by up to 10%. Mondelez International, the parent of Cadbury and Toblerone, has similarly raised alarms, with its CEO warning of "unprecedented" cost inflation during a recent investor conference. This industry-wide trend highlights a broader crisis in the chocolate sector, where demand continues to grow—global chocolate consumption is projected to rise by 2% annually through 2030—yet supply struggles to keep pace.

Experts point to long-term solutions that could mitigate these issues. Sustainable farming initiatives, such as those promoted by the World Cocoa Foundation, aim to improve yields through better agricultural practices, disease-resistant varieties, and fair-trade premiums for farmers. Hershey itself has committed to sourcing 100% of its cocoa from certified sustainable farms by 2025, a goal it claims is on track despite current challenges. However, critics argue that these efforts are insufficient without greater investment from governments and corporations to address climate change, which is intensifying weather extremes in cocoa-growing regions.

From an economic perspective, the price hikes could have mixed effects. On one hand, they might bolster Hershey's bottom line, with analysts from firms like Goldman Sachs forecasting a 4% revenue boost in the coming fiscal year if volumes hold steady. The company's stock, which dipped slightly on the announcement, could rebound as investors digest the proactive stance. On the other hand, persistent inflation in food categories risks eroding consumer confidence, potentially contributing to a slowdown in discretionary spending. The U.S. Department of Agriculture has noted that food prices overall are up 25% since 2019, with sweets and snacks seeing some of the steepest climbs.

Looking ahead, Hershey executives remain optimistic about innovation as a counterbalance to pricing pressures. The company is rolling out new products, such as plant-based chocolate alternatives and lower-sugar options, to appeal to health-conscious consumers and diversify away from traditional cocoa-heavy items. Partnerships with tech firms for precision agriculture could also help stabilize supplies in the future. Yet, the immediate reality is clear: chocolate lovers will need to brace for higher costs, prompting a reevaluation of how much they're willing to pay for that comforting bite of sweetness.

This price increase also raises questions about equity in the global food system. While consumers in developed markets grumble over a few extra cents per bar, cocoa farmers in West Africa often earn poverty-level wages, with many receiving less than $1 per day despite the commodity's soaring value. Advocacy groups like Fairtrade International are calling for higher minimum prices and better income guarantees to ensure that the benefits of these market dynamics trickle down to producers. Hershey has pledged to support such initiatives, but the effectiveness of these commitments will be tested in the coming years.

In the grand scheme, this episode reflects broader themes in the consumer goods sector, where climate vulnerability, geopolitical tensions, and economic inequality intersect. As Hershey navigates these choppy waters, its ability to balance profitability with affordability will be crucial. For now, the announcement serves as a stark reminder that even simple pleasures like a chocolate bar are not immune to the complexities of our interconnected world. Whether this leads to lasting changes in consumption habits or spurs innovation in alternative ingredients remains to be seen, but one thing is certain: the era of cheap chocolate may be melting away.

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