Hershey is cautioning on its 2024 profit growth as the company contends with rising cocoa costs that are leading to higher prices for chocolate.
Cocoa futures prices have doubled over the past year and hit an all-time high of $5,874 per metric ton on Friday. Bad weather in West Africa is being blamed for damaging crop yields, which is pushing cocoa prices higher.
“The magnitude and pace of recent price increases seem to be unprecedented,” wrote Citi analyst Thomas Palmer.
With less than a week to go until Valentine’s Day, chocolate is on the minds of many consumers. But with inflation concerns still top of mind, many shoppers are pulling back on their spending and eyeing rising food prices cautiously.
Still, Hershey CEO Michele Buck is trying to ease consumers’ minds.
“Given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage the business,” Buck said during the company’s quarterly earnings conference call.
Hershey Co. anticipates its full-year earnings per share being relatively flat, partly due to higher cocoa and sugar costs.
Margins may also face some pressure.
“The confection business is going to bear the brunt of the margin impact due to cocoa,” Chief Financial Officer Steven Voskuil said on the call.
Hershey’s stock ended Friday down 3.4%.