The Hershey Company on Tuesday confirmed media reports it is raising candy prices as it battles rising cocoa costs.
The price change will be a “low double-digit increase” and affect products across the company’s confection portfolio, according to a Hershey spokesperson. Founded in 1894, the Pennsylvania-based company owns over 90 brands including Hershey Kisses, KitKat, Reese’s and York.
“This change is not related to tariffs or trade policies,” the spokesperson said in a statement to CBS News. “It reflects the reality of rising ingredient costs including the unprecedented cost of cocoa.”
Price increases typically take around 90 days to take effect, although the timeframe varies by retailer, the spokesperson added.
Global cocoa shortage
Cocoa prices have skyrocketed in recent years due to a global cocoa shortage. The cost for the commodity were $8,402 in June, a 73% increase from five years ago, according to data from the Federal Reserve Bank of St. Louis, which tracks food prices.
The majority of the world’s cocoa supply comes from Ghana and the Ivory Coast, which have faced heatwaves and heavy rain linked to climate change. These unfavorable weather conditions have led to diseases like Black pod rot, which kills cocoa crops. Chronic underinvestment in cocoa farms is another reason behind the spike in cocoa prices, according to an article from J.P. Morgan Global Research.
“Cocoa is a market where the grower produces a very high-value good but receives a very low share of the actual value chain. As a result, replanting rates of diseased trees are low and West African yields have been more subject to weather impacts,” Tracey Allen, an agricultural commodities strategist at J.P. Morgan, said in the article.
In a May earnings call, Michele Buck, president of The Hershey Company, said the candy company would lean into products that are “less Cocoa intensive” as it navigates the inflation of cocoa prices. This is part of the company’s vision to become a “snacking powerhouse” Buck said.
“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,” she added.
Hershey share prices were up 2.8% after the closing bell on Tuesday.
Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes,” CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.
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