The Hershey Company is warning of an upcoming Halloween and Christmas candy shortage due to the supply chain crisis and scarcity of raw ingredients like cocoa.
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.”
According to a report from Penn Live, Hershey’s began producing Halloween candy in the spring, as the standard candy and holiday candies use the same production lines.
“It was a tough decision to balance that with the seasons, but we thought that was really important,” Buck told Penn Live. “We had opportunity to deliver more Halloween, but we weren’t able to supply that. And we were really producing.”
It’s not just Hershey’s that is feeling the pressure to deliver. Small and mid-sized candy companies are also reporting difficulty in meeting demand.
Atkinson Candy’s would fill orders to retailers and wholesale distributors in two weeks prior to COVID-19, now it can take them up to three months to deliver — if they are able to 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 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.”
In June, Hershey raised prices on several products by an average of 14 percent due to inflation. Customers are now paying approximately 17 percent more for standard-sized Hershey bars, 13 percent more on “King” 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 at the time of the price hikes. “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.”
The company has raised prices in the past and the extra cost was accepted by their customers.
“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.
The 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.