Hershey price increase sends inflation signal

Rising commodity costs and expense pressures prompted Hershey to announce an 8% increase in wholesale prices as it looks to maintain profitability in 2014 and beyond.

The company, the world’s largest producer of chocolate, said the price increase would affect the majority of its U.S., Puerto Rico and export portfolio including instant consumable, multi-pack, packaged candy and grocery lines. Hershey said the price hike was needed to help offset part of the significant increases in input costs, including raw materials, packaging, fuel, utilities and transportation, which it expects to incur in the future.

“Over the last year key input costs have been volatile and remain at levels that are above historical averages,” said Michele G. Buck, Hershey’s North American president. “Commodity spot prices for ingredients such as cocoa, dairy and nuts have increased meaningfully since the beginning of the year. Given these trends, we expect significant commodity cost increases in 2015.”

She went on to add that Hershey is a gross margin focused company and as such remains committed to a consumer-centric business model of bringing insights to retailers that will enable growth of the business and the category.

“During the transition period we will support our brands with higher levels of investment, including merchandising, programming, advertising and innovation, that will benefit Hershey and the category,” Buck said.

Retailers who buy direct from the Hershey will be able to take advantage of pre-price increase pricing until August 12.