Hershey Responds to Global Cocoa Shortage with Product Shift, Price Increases

Hershey has announced that candy prices are going up, thanks to a worldwide cocoa shortage that's driving costs through the roof.

The company said the price hike will be a "low double-digit" increase, affecting many of its popular treats like Reese's, KitKat, and Hershey Kisses.

These changes are expected to roll out over the next few months, depending on the retailer.

"This change is not related to tariffs or trade policies," a Hershey spokesperson said. "It reflects the reality of rising ingredient costs including the unprecedented cost of cocoa."

Cocoa prices have reached record levels. Back in June, cocoa prices hit $8,402 per metric ton — a huge jump of 73% compared to five years ago.

Just months earlier, prices climbed as high as $12,000 per ton, Independent said. The spike in cocoa prices is mostly because of serious crop issues in West Africa, the region that produces around 70% of the world's cocoa supply.

Farmers in Ghana and the Ivory Coast are struggling with extreme weather, crop diseases like Black pod rot, and aging trees.

Hershey Products Stay Under $4 Despite Price Hike

Another big problem is underinvestment in cocoa farms. Many farmers receive only a small share of the profits, leaving them unable to replace sick trees or improve their harvests.

"Cocoa is a market where the grower produces a very high-value good but receives a very low share of the actual value chain," explained Tracey Allen, a commodities expert from J.P. Morgan.

Hershey says it isn't just raising prices—it's also changing its strategy. In a recent call with investors, company president Michele Buck said Hershey plans to focus more on snacks that don't use as much cocoa.

According to CBS News, this includes salty and "better-for-you" snacks that could help bring in new customers.

"We love our chocolate business and we want to continue to grow that," Buck said. "But we also know that if we get into white spaces like sweets, better-for-you and salty, it adds incremental consumers and occasions."

Even with the higher prices, most Hershey treats will likely stay under $4, according to a report from The Wall Street Journal.

The company also noted that demand for its candy remains strong—even during the summer season when s'mores and chocolate treats are a favorite.

Hershey's share price rose 2.8% after the news was confirmed Tuesday, showing investors remain confident despite the challenges.

Originally published on vcpost.com