The Candy company known as Hershey’s is warning of an upcoming Halloween and Christmas candy shortage. This is due to the supply chain crisis and scarcity of raw ingredients like cocoa.
Hershey’s statistics show that Halloween candy sales make up approximately 10 percent of the company’s annual revenue.
Hershey Chief Executive Officer Michele Buck told Reuters that the issues mentioned above are compounded by the “company’s focus on meeting demand during non-holiday periods.”
Hershey’s begins producing Halloween candy in the spring. This makes sense as the standard candy and holiday candies use the same production line according to a report from Penn Live,
“It was a tough decision to balance that with the seasons, but we thought that was important,” Buck told Penn Live. “We had an opportunity to deliver more Halloween, but we weren’t able to supply that. And we were producing.”
It’s not just the big candy companies like Hershey’s that are feeling the pressure to deliver. Small and mid-sized candy creators are also reporting difficulty in meeting demand.
Before Covid Atkinson Candy would fill orders to retailers and wholesale distributors in two weeks, now it can take them up to three months to deliver. That’s if they can produce the order at all. Food Dive reports that “the labor shortage in 2021 was so severe that the company lost out on millions of dollars in sales simply because it didn’t have enough employees.”
According to the same report, “Atkinson is not alone. Executives at small and mid-size candy companies said they are besieged by a slew of challenges weighing on their businesses, including higher shipping costs, labor shortages, and commodities that often aren’t being delivered in the quantities they were promised.”
Due to inflation, Hershey raised prices on several products by an average of 14 percent. Customers are now paying approximately 17 percent more for standard-sized Hershey bars, 13 percent more on “King” sized bars, and varying amounts more on other items from the company.
“Management says that the incremental pricing is in response to incremental cost pressure as some hedge expirations approach,” Goldman Sachs analyst Jason English explained to Yahoo News. “While higher pricing on higher costs is not unique to the company, we believe Hershey is enacting the increases to preserve its growth algorithm which contrasts meaningfully with center-of-plate food companies who are raising prices to minimize earnings declines.”
“Historically, our category has successfully been able to execute price increases and we expect that to be the case this year as well,” Buck told ABC News in February when the company first announced the planned price hikes.
Historically companies have raised prices before with the consumer accepting the added cost of their treatment. The Hershey’s CEO said that the reason they are able to get away with raising prices is due to their loyal customer base.
“They don’t want to switch to another brand,” Buck asserted.
