Hershey, the renowned US chocolatier, issued a profit warning amidst skyrocketing cocoa prices, reaching record levels due to dry weather affecting West African crops. Global cocoa prices surged to $5,874 per ton in New York and £4,660 per ton in London, more than double the prices from a year ago.
The company reported a 6.6% decline in fourth-quarter sales as consumers tightened spending amid rising costs. CEO Michele Buck hinted at potential price hikes to offset the impact of soaring cocoa prices, stating they would utilize various strategies to manage the business.
Hershey unveiled a two-year restructuring plan aimed at saving $300 million annually, affecting less than 5% of its global workforce. Similarly, Cadbury owner Mondelēz highlighted cocoa and sugar cost increases as significant challenges.
Mondelēz confirmed price hikes on Cadbury products as a last resort to mitigate rising costs. This decision follows a report indicating a more than 50% price increase in popular festive chocolates between 2022 and 2023.
While overall UK supermarket food and drink inflation dropped to 8.3%, chocolate prices surged by 15.3%, as per a study by consumer watchdog Which? The industry braces for further adjustments as cocoa prices remain elevated, posing challenges to chocolate manufacturers and consumers alike.