Hershey increases prices to counter input cost rise

The Hershey Company, the No. 1 candy producer in the United States, has announced price increases for its chocolate and candies in response to rising input costs of its key ingredients.

The maker of Reese’s, Kit Kat and Ice Breakers raised wholesale prices by about 8% across its instant consumable, multi-pack, packaged candy and grocery lines.

According to Hershey, in 2014/2015, the overall cost environment for food commodities is expected to be under pressure due to domestic and worldwide agricultural supply and demand imbalance and other macroeconomic factors. The costs of Hershey’s key ingredients like dairy, nuts, cocoa and sugar have increased dramatically this year and are expected to rise further in the coming quarters.

The higher costs are expected to dent the company’s margins. The costs of other inputs – packaging, fuel, utilities and transportation – are also rising.

Hershey said it now expects 2014 sales and adjusted profit to be at the lower end of its previous estimate.