Hershey bets big on Easter as cocoa price crisis looms
Chocolate makers set their plans for this Easter last year, and have said they will hike prices again to cover the cocoa crunch.
NEW YORK/LONDON — Hershey, Mondelez and other confection-makers are employing promotions and pitching more non-chocolate Easter treats like cookies ‘n’ cream bunnies at a time when soaring cocoa prices threaten their profits and shoppers balk at high prices.
With shoppers’ “impulse buys” of chocolate and candy at convenience stores and in grocery checkout lines down, according to industry data, special occasions like Easter and Halloween are increasingly important to the companies’ sales.
Cocoa prices have tripled over the past 12 months thanks to bean disease in West Africa, which continues to worsen, meaning companies are not expected to get relief anytime soon. Sugar prices are also up some 7 per cent.
Chocolate makers set their plans for this Easter last year, and have said they will hike prices again to cover the cocoa crunch. The companies face additional pressure on their profit margins as their hedges protecting commodity costs expire later this year and next.
But, the price hikes are coming at a delicate time as inflation-weary consumers are already pushing back.
That makes seasonal sales key. Easter sales of candy in the United States, the world’s biggest chocolate consumer, are expected to at least reach last year’s total of about $5.4 billion, although this will be driven mostly by price increases not volumes sold, according to the National Confectioners Association.
Easter is the third-biggest occasion in the United States for buying chocolate and candies, with Halloween taking the top spot, followed by the winter holidays, according to the confectioners association.
“People will buy during the holidays, but they will cut out impulse buying,” through the year, said David Branch, a sector manager focusing on cocoa at Wells Fargo AgriFood Institute.
Data from the National Confectioners Association shows that last year, the volume of chocolate and candy sold for everyday occasions fell 3.6 per cent compared to 2022. Volumes of chocolate and candy sold for seasonal occasions like Easter rose slightly by 0.1 per cent.
Branch projects that given the continued inflation in cocoa, the trend will continue.
Hershey is shipping more non-cocoa treats to retailers this Easter in addition to its iconic Reese’s chocolate bunnies and eggs. It is introducing a new six-pack of cookies ‘n’ cream bunnies, offering full-sized Kit Kat lemon crisp bars and mixing Haribo gummy bears with chocolate bars in its assortment bags.
Hershey spokesperson Allison Kleinfelter said consumers are continuing to buy seasonal products because parents want to preserve traditions like Easter baskets filled with chocolate bunnies and egg hunts.
The non-chocolate Easter offerings have no connection to current cocoa prices, she added.
Simon Crowther, marketing director for seasonal confectionery UK at Mondelez told Reuters the Oreo cookie-maker has introduced a new “Cadbury Ultimate Egg” range, and a premium Toblerone “Edgy Egg,” aimed at older families and upmarket shoppers who may be more willing to splurge on chocolate.
PUSHING INVENTORY
U.S. retailers have increased discounts on Cadbury, Reese’s, Hershey’s, M&Ms and Lindt this Easter versus last, according to research analytics firm Dataweave.
Big box store Target and supermarket chain Kroger are also offering bigger discounts on Easter candy this year compared to last, according to the firm. At Target in New York in early March, Reese’s mini eggs unwrapped, another new product for this season, and bunnies were buy one, get one for 50 per cent.
A Kroger spokesperson said the grocer updated its strategy to include more frequent promotions on top-selling brand and pack sizes.
John Ament, an independent consultant and former global vice president of cocoa at M&Ms maker Mars, said there is no doubt that chocolate will be more heavily discounted this Easter compared to last because consumers are weary of price increases.
Chocolate makers have already pushed through price increases, “So this Easter will be more expensive than last year, and there’s less consumer appetite to spend,” he said.
He added that this year’s holiday will be tougher than 2023’s because of the hikes.