Hershey warns of weak Halloween sales as high cocoa costs bite
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Hershey is warning of a disappointing Halloween, saying candy sales are lagging — just as trick-or-treaters get ready to hit the streets.
Why it matters: The candy aisle has become ground zero for climate-driven price pressure, and for quiet recipe tweaks as chocolate makers stretch cocoa supplies.
The big picture: Prices remain a fright this year — up 10.4%, driven largely by cocoa costs, which "continue to rise by double digits," according to S&P Global Market Intelligence's Consumer Markets Strategic Report.
- Shoppers are expected to buy less candy by total volume for the third time in four years, S&P said. (Though sales in dollar terms are expected to rise, thanks to sharply higher prices.)
Zoom in: Cocoa prices are up more than 70% from 2023 levels, Hershey CEO Kirk Tanner said Thursday on the company's earnings call.
- Hershey price increases "did not fully cover" two years of inflation, Tanner said.
What they're saying: "Although the Halloween season began slower than anticipated, it was likely influenced by factors such as warmer weather conditions, and a concentration of seasonal purchases in the final week due to Halloween occurring on a Friday," Tanner said in prepared remarks.
- Tanner noted that historically when Halloween falls on a Friday, about a third of sales typically occur in the final week.
Zoom out: Even with this year's Halloween slowdown, the confectionery industry is still growing long-term.
- But the taste of chocolate may be changing. The New York Times reported Thursday that some candy makers have reformulated recipes to use less cocoa, swapping in vegetable fats or other substitutes as prices soar.
- The National Confectioners Association says growth in the market is coming from gummies, chewy candies and sour flavors.
What's next: Late shoppers might find deals on candy — or even scoop up leftover bags for Christmas stockings.
- "Since a surplus of sweets would be hard for candy makers to stomach, last-minute shoppers can expect to see additional discounts heading into the holiday," Michael Zdinak, director of U.S. economics at S&P Global Market Intelligence, told Axios.
- "But after years of price hikes, it remains to be seen whether those discounts will be enough for consumers to feel like they are getting a good deal."
