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Hershey’s CEO Warns of Possible Price Increase Due to Record Cocoa Prices
February 9, 2024
Hershey’s CEO and company president Michele Buck has warned of a potential consumer price increase for the brand’s chocolate snacks and goods. This is due to the rising prices of raw cocoa, which “could hurt the bottom line of chocolate manufacturers, who warned this week candy prices could rise as a result,” according to UPI.
In a press release, Buck stated, “We continue to operate in a dynamic environment, but we are encouraged by the resilience of seasonal traditions and the consumer response to innovation within our categories.”
She explained that while “historic cocoa prices” are expected to limit the company’s earnings growth this year, she believes “strong marketing plans, innovation and brand investments” will drive growth and meet consumers’ evolving needs.
“We can’t talk about future pricing,” Buck said on a call with analysts, as reported by BBC. “Given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage the business.”
Buck’s comments came as Hershey announced its financial results for the three months ending the last day of December 2023. Hershey’s overall sales fell by 6.6% as inflation-hit consumers cut back spending on treats. Subsequently, cocoa prices are now about 40% more expensive than at the start of this year.
CNBC reported that cocoa prices have substantially increased due to weather-related issues. The El Niño weather phenomenon has caused drier temperatures in West Africa, where three-quarters of the world’s cocoa is produced.
El Niño-Southern Oscillation is a natural climate phenomenon that occurs when tropical eastern Pacific sea surface temperatures rise at least 0.5 degrees above their long-term average. However, this can sometimes have disastrous consequences on several crops, impacting winds and climate.
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