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Hershey will raise chocolate prices next year

Hershey's chocolate is about to get more expensive.The candy company is planning to raise the prices ...

Posted: Oct 25, 2018 12:08 PM
Updated: Oct 25, 2018 12:08 PM

Hershey's chocolate is about to get more expensive.

The candy company is planning to raise the prices of a fifth of its products by about 2.5%, Hershey reiterated on Thursday. The changes will go into effect next year.

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One of many companies getting squeezed by rising commodity and shipping costs, Hershey hopes higher prices will offset those costs without scaring away customers.

Hershey (HSY) first said that it would raise prices over the summer, citing rising operational costs. "Our new pricing approach is much more precise," said CEO Michele Buck at the time.

Chief Financial Officer Patricia Little said on Thursday that Hershey started feeling the impact of higher freight and logistics last year.

"I don't expect that to change going forward into next year," she said.

The company is doing more than just increase prices to drive growth.

Hershey is investing in digital to keep impulse shopping alive online. It's also introduced new products like Hershey's Gold, a "caramelized creme" bar with pretzels and peanuts baked inside, and Reese's Outrageous, a peanut butter chocolate bar with Reese's candy inside.

Next year, the company will introduce Reese's Thins, a 40% thinner Reese's peanut butter cup.

Plus, the company has been scooping up healthier brands, including Pirate Brands, which makes Pirate's Booty, Smart Puffs and Original Tings.

Last year, Hershey's bought Amplify Snack Brands, which makes SkinnyPop popcorn and Oatmega whey-protein bars, for $1.6 billion. Pirate Brands will operate within Amplify's hub in Austin, Texas.

The acquisitions boosted sales in the third quarter. Sales increased by 2.9% in the three months that ended in September compared to the same period last year.

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