HERSHEY, PA -- Hershey Co. said rising commodity costs have forced the candy giant to raise prices on most of its products by an average of 8%.
The No. 1 candy producer in the U.S. announced on July 15 that the price hike is effective immediately. Customers who purchase directly from Hershey will be able to buy at prior prices until Aug. 12.
"Over the last year, key input costs have been volatile and remain at levels that are above historical averages," said Michele G. Buck, president of Hershey North America. "Commodity spot prices for ingredients such as cocoa, dairy and nuts have increased meaningfully since the beginning of the year."
The cost of cocoa butter, a byproduct of the cocoa bean that gives chocolate its melt-in-the-mouth texture, has been high since late 2013. The cocoa butter ratio over the price of the bean is now about 2.65 times, bringing the price above $8,200 per ton for nearby needs. Some analysts said they see this as the main driver in the price hike.
Additionally, the company said it expects increases for packaging, fuel and other costs. Hershey's last price increase -- a 9.7% hike --was in 2011.
Hershey said it now expects 2014 sales growth to be at the lower end of its long-term target of 5% to 7%.