It's going to cost more to satisfy your sweet tooth. The Hershey Company, reacting to increases in the price of cocoa and other ingredients, says it's increasing wholesale prices across its U.S., Puerto Rico and export chocolate and sugar confectionery lines.
A weighted average 11 percent increase on the company's instant consumable, multi-pack and packaged candy lines is effective immediately. The changes approximate a 10 percent increase over Hershey's entire domestic product line and will help offset a portion of the significant increases in the Company's input costs, including raw materials, packaging materials, fuel, utilities, and transportation.
"Commodity costs have been volatile over the last several years and continue to remain at levels that are well above historical averages," said David J. West, President and Chief Executive Officer, The Hershey Company. "Market prices for ingredients such as cocoa, corn sweeteners, sugar and peanuts are up 20 to 45 percent since the beginning of the year. As such, in 2009 we expect our commodity cost increase to be more than double the 2008 increase.
Hershey said it has executed a commodity hedging strategy that will firm up its 2009 commodity cost profile, but needed the price increase to maintain its profit margin.
"Hershey remains committed to providing the world's best chocolate and confectionery products made with the highest-quality ingredients. Our consumers and customers understand this and realize that Hershey products will continue to represent outstanding quality and excellent value," West said.
Food commodity prices have been rising in response to increasing global demand. Cocoa prices have hit a record high of $2,801 per ton, an increase of almost 30 percent since January, according to a report from the Cocoa Producers' Alliance.