Hershey Announces Price Hike

Wholesale increase of about 10% for raw materials, more; will work with retailers on promotions

Published in CSP Daily News

HERSHEY, Pa. -- The Hershey Co. has announced an increase in wholesale prices across the majority of its U.S., Puerto Rico and export portfolio. A weighted average price increase of approximately 9.7% across the company's instant consumable, multi-pack, packaged candy and grocery lines went into effect yesterday, the company said.

These changes will help offset part of the significant increases in Hershey's input costs, including raw materials, packaging, fuel, utilities and transportation, it added.

"We remain committed to the higher levels of global brand support, [image-nocss] consumer spending and investment in go-to-market capabilities communicated in February," said David J. West, president and chief executive officer. "We will work with our retail customers to ensure that the implementation of the price increase is supported with customer trade promotions and merchandising that continues to grow the category."

He added, "Direct-buying customers will be able to purchase transitional amounts of product into May, and we do not expect seasonal net price realization until Easter 2012. Given this timing and some higher than anticipated costs, we do not expect this action to materially impact our financial expectations this year. We expect the majority of the financial benefit from this pricing action to impact our earnings in 2012. As a result, we continue to expect full-year 2011 net sales, including the impact of foreign currency exchange rates, and adjusted earnings per share-diluted growth to be around the top of the company's long-term 3% to 5% and 6% to 8% objectives, respectively."

West concluded, "Our category offers attractive price points, and consumers know and trust Hershey's great brands, including Hershey's, Hershey's Kisses, Reese's, Kit Kat and Twizzlers. Our products and our category will continue to provide the value and quality that consumers expect, and this action will position Hershey to achieve the opportunities that lie ahead."

This year, analysts are counting on Hershey's sales to grow by 5% to $5.9 billion, said a MarketWatch report.

Confectionery sales posted steady growth throughout 2010, with Hershey's U.S. retail takeaway up 5.3% last year in channels that account for 80% of its business, the report said.

The company's business has rebounded in the last two years amid a strong push to roll out new Hershey and Reese candy products and a major campaign to increase spending on promoting its products, said MarketWatch.