American candy-maker The Hershey Company warned on Thursday that it would fail to have enough candy come Halloween and Christmas time due to a variety of supply-chain issues and labor shortages plaguing the industry.
Hershey Chief Executive Officer Michele Buck told Reuters that the coming shortage will be caused in part by the Russian-Ukraine war impacting cocoa, edible oil, and other ingredients, while other issues stemming from the economic disruption during COVID are also to blame.
Still, Hershey’s said that sales for 2022 will top last year, despite not being able to meet demand during the busy holiday season. A recent analysis found that Hershey’s raised the prices of its various bars by a weighted average of 14%.
“Management says that the incremental pricing is in response to incremental cost pressure as some hedge expirations approach,” Goldman Sachs analyst Jason English explained. “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 National Confectioners Association also recently told FoodDive that the entire industry is facing pressures due to the state of the American economy.
“There’s no question that the challenges faced across the industry — supply chain, inflation, labor shortages, broad pandemic impact and more — have disproportionately affected small and mid-sized companies compared with their larger counterparts,” Carly Schildhaus, a spokesperson for the trade group, told FoodDive.
Frankford Candy CEO Stuart Selarnick added that his Philadelphia candy company has had to get creative in order to find needed ingredients. Selarnick told the outlet that it’s the first time in company history that there has ever been trouble finding ingredients.
“You have to move on,” Selnick said. “You have to be resourceful and find other sources, other opportunities, other suppliers,” Selarnick said. “That’s what we’re really good at because we’re nimble. We can move quickly.”
Adding to the problem — albeit a bittersweet one for the candy makers given the shortage of needed supply — is that demand for the sugary confections is strong even as inflation raises costs across the board.
National Confectioners Association CEO John Downs told the media that “in contrast to rising costs for families related to inflation, health care and simply putting food on the table, candy remains a simple, affordable treat. Whether consumers found their inspiration on social media or in the grocery aisle, they reached for chocolate and candy as a means of self-care and enjoyment in an otherwise uncertain time.”