SUBSCRIBE

Breaking News on Food & Beverage Development - North AmericaEU edition | Asian edition

News > Manufacturers

Hershey follows Nestlé with price hike

Post a comment

By Oliver Nieburg+

16-Jul-2014
Last updated on 16-Jul-2014 at 12:26 GMT

Hershey responds to rising commodity costs with 8% price hike
Hershey responds to rising commodity costs with 8% price hike

Hershey has upped its global wholesale prices by 8% after responding to rising commodity costs including cocoa, dairy and nuts.

The announcement came three months after Nestlé increased its confectionery prices in response to mounting commodity costs.

Hershey’s price hike affects its instant consumables, multi-pack, packaged candy and grocery lines in the US, Puerto Rico and export markets.

The firm said the decision was taken to counter rising input costs from raw materials as well as packaging, fuel, utilities and transportation.

Cocoa, dairy and nut prices

Michele G. Buck, North America president at Hershey, said: “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.”

Cocoa prices reached a monthly average of $3,173 per metric ton (MT) in June, 39% higher than the same period last year.

According to Euromonitor International, cocoa accounted for 14% of manufacturing costs for a 100 g chocolate bar in May 2014, with the bulk of costs coming from processing.

Mars recently told this site that it would not raise prices in response to increasing commodity costs as pricing decisions were made independently of ingredients costs.

Hershey outlook

Buck said that the benefits from her firm’s price hike would take effect in next year’s financials.

Hershey has offered direct buying customers a chance to purchase at price points prior to the price increase up until 12 August.

The company will release its second quarter results on 24 July. It said in its release that it expects net sales for the quarter to rise 4.5%

This falls just short of Hershey’s full-year 2014 target of net sales growth between 5-7%.  Hershey predicted full year net sales would be at the low end of its target.

It also said adjusted earnings per share-diluted growth would be at low end of its 9 to 11% target, partly due to rising input costs.

Subscribe to our FREE newsletter

Get FREE access to authoritative breaking news, videos, podcasts, webinars and white papers. SUBSCRIBE

Post a comment

Comment title *
Your comment *
Your name *
Your email *

We will not publish your email on the site

I agree to Terms and Conditions

These comments have not been moderated. You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment. Any comment that violates these terms may be removed in its entirety as we do not edit comments. If you wish to complain about a comment please use the "REPORT ABUSE" button or contact the editors.

Key Industry Events

 

Access all events listing

Our events, Events from partners...