Hershey Co. (HSY) has told retailers that it plans a double-digit price increase on its chocolate bars and other candies due to a surge in its cocoa input costs.
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The maker of Reese’s Peanut Butter Cups and Hershey Kisses has confirmed the price increase and said it is necessary as the company struggles with elevated cocoa costs. “This change is not related to tariffs or trade policies. It reflects the reality of rising ingredient costs including the unprecedented cost of cocoa,” said Hershey in a written statement.
Cocoa prices have risen sharply in the last two years and hit record levels due to supply problems in Ghana and the Ivory Coast, the two main growing regions in the world. Drought conditions and disease have wiped out vast swaths of the global cocoa crop, pushing prices for the main ingredient in chocolate to record highs.
Input Costs
While cocoa prices have come down in recent months, they remain above historic levels and continue to be elevated at $8,180 per tonne. During Hershey’s quarterly earnings call in May, management said the company was working to absorb high input costs by adjusting prices.
Hershey has warned that consumers should expect higher prices in the second and third quarters of this year. The company, and its stock, have struggled for years with surging cocoa prices. HSY stock has gained 10% this year but is down 16% over the past three years.
Is HSY Stock a Buy?
The stock of Hershey Co. has a consensus Hold rating among 15 Wall Street analysts. That rating is based on one Buy, 12 Hold, and two Sell recommendations issued in the last three months. The average HSY price target of $163.75 implies 11.24% downside from current levels.
