Hershey issues warning over record cocoa prices

Hershey has warned on profits and sales after a sharp increase in the cost of cocoa to record levels pushed up the price of chocolate.

Global cocoa prices hit a new peak of £4,660 a ton on Thursday (8), more than double the £2,023 a ton a year ago as dry weather continued to affect crops in west Africa, with poor harvests driving up prices in the region, which produces the majority of global supply.

Hershey, one of the world’s biggest chocolate companies and the maker of products including Reese’s Peanut Butter Cups, warned that cocoa prices were expected to limit earnings growth this year. The chief executive of Hershey, which reported a 6.6 per cent fall in sales in the fourth quarter as consumers cut back on spending, indicated that soaring costs could mean price rises on products.

“Given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage our business,” Michele Buck said.

Hershey’s statement comes a month after Cadbury owner Mondelēz said significant increases in the cost of cocoa and sugar would be one of its biggest challenges this year.

In a post on X, a Cadbury UK spokesperson said last month that it was increasing prices as a “last resort” to manage costs.

Cocoa crops are highly sensitive to weather changes. Around 70 per cent of the world’s cocoa comes from West Africa so the commodity is very susceptible to price swings due to the weather. It is expected that the shortage will extend into next year, with missing volumes from this season’s crop having to be filled with beans from the next.