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Hershey to Raise Chocolate Prices as Cocoa Costs Hit Unprecedented Levels

Your favorite chocolate bars, including Kit Kat and Reese’s Peanut Butter Cups, are set to become more expensive as Hershey announces a notable price increase across its product lineup. This move comes in response to soaring cocoa prices, which have surged dramatically over the past two years.

Cocoa Prices Reach Historic Highs

Data from FactSet reveals that cocoa futures skyrocketed by 178% in 2024, following a steep 61% rise in 2023. The West African region, particularly Ghana and Ivory Coast, accounts for nearly 60% of global cocoa production. Unfortunately, these key producing countries have suffered from poor harvests linked to adverse weather conditions intensified by climate change.

A recent study led by Maximillian Kotz of the Barcelona Supercomputer Center highlighted that an early 2024 heatwave in the region was made 4 degrees Celsius hotter due to climate change, driving cocoa prices up by a staggering 280% in April alone.

Currently, cocoa futures are trading at approximately $8,156 per metric ton—a decrease from the record $12,646 per metric ton seen in December 2024, yet still significantly above levels from two years ago.

Hershey’s Strategic Response to Rising Costs

Hershey’s spokesperson confirmed to CNN that the company is raising prices by a “lower double-digit percentage” on its chocolate products, marking the first major price hike in years. The company emphasized that the price increase is unrelated to tariffs or trade policy changes. During its May earnings call, Hershey reported $15 million to $20 million in tariff-related expenses for the second quarter, but these costs are separate from the cocoa-driven price adjustments.

“We have worked hard for years to absorb increasing ingredient costs and maintain affordability, with 75% of our products priced under $4,” said a Hershey representative. However, the unprecedented rise in cocoa costs has made price adjustments unavoidable.

Shrinkflation: Adjusting Packaging to Ease Consumer Impact

Alongside the price hike, Hershey plans to implement changes to its “price pack architecture,” a strategy involving reducing the quantity of product in packages, commonly known as shrinkflation. CEO Michele Buck explained in May that this approach helps balance pricing while maintaining value perception among consumers.

“It’s not a simple price increase, but a mix of size and pricing adjustments that may offer better perceived value,” Buck said.

Industry-Wide Challenge

Hershey is not alone in facing this challenge. Swiss chocolatier Lindt also raised its prices in 2024 and projects continued increases into 2025. Lindt cited a “challenging year” marked by record cocoa prices, rising costs, and dampened consumer sentiment as the reasons for their price hikes.

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