Chocolate and candy prices going up

Hershey says it will raise prices by nearly 10% to offset rising costs. Will the rest of the industry follow? With video updates.

By Kim Peterson Mar 31, 2011 1:10PM
Get ready for broad price hikes in candy and chocolate.

Hershey (HSY) said this week it's going to raise prices by 9.7%, a move that many people expect competitors to follow. The entire industry is facing huge price increases for raw ingredients -- the cost of sugar has more than doubled in the past year -- and can no longer absorb the higher expenses.

In addition to its signature chocolate bar, Hershey makes Reese's Peanut Butter Cups, Twizzlers, Kit Kat and Hershey Kisses. It's not just the cost of ingredients that are rising. Hershey also said it's paying more now for fuel, utilities and transportation. Shares of Hershey were up less than 1% Thursday to $54.72.

Post continues after this video about Hershey stock as a good investment:
Now the industry is waiting for similar price hikes from Mars, which makes M&M candies, and Kraft (KFT), which owns Cadbury. Kraft has already raised prices on some of its other products in the past year.

Image: Chocolate (© image100/Corbis)"I wouldn't be surprised if we heard competitors taking similar actions," a Morningstar analyst told Reuters. One Swiss chocolate maker, Lindt & Spruengli (COCXF), has said it may raise prices in the second half of this year.

That's because soaring prices for ingredients show no signs of slowing. One firm predicts that coffee, sugar and cocoa prices will rise five- to 10-fold by 2014, according to Bloomberg. And there isn't enough farmland to keep up with the demand.

Food prices are rising worldwide. A United Nations index of global food prices hit a record last month, Bloomberg reported. The cost of cocoa, another key ingredient for Hershey and Kraft, has been extremely volatile over the past few years.

"There's a tremendous shortage of food, there's a tremendous shortage of arable land," an analyst told Bloomberg. "Any kind of food products are going to increase."
9Comments
Mar 31, 2011 5:41PM
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ok........the government pays US farms to NOT grow things..........and we have a shortage of food and land?

 

That is so BOGUS!!!

 

Mar 31, 2011 5:10PM
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I simply stopped buying sweets because of the rising prices. I shop with one task at hand now> buy only what i need.
Mar 31, 2011 5:50PM
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Hey, I got an idea! Lets give the rich a tax break so it will "trickle down" to us in the middle class!! LOL!! That was the biggest scam of the year and the rich are laughing all the way to the bank!  Wait, I got another idea,  we can let the big corporations get away with not paying a dime in taxes so those savings will be passed along to the consumer!! LOL AGAIN!! Second biggest scam of the year!! Keep believing what the Republicans are feeding you!  They are laughing hysterically as they watch you lose your house and file bankruptcy!! The middle class is being annihilated and we are letting it happen!
Mar 31, 2011 6:56PM
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People will just stop buying it if it gets too expensive. It's already went up. Where are these people that write these aritcles? Everything has gone up over the past two years and people are just getting what they need when it's on sale. So if any of these companies go out of business it will be there own fault.The consumers will do what they have to do to survive as well. 
Mar 31, 2011 5:33PM
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Hi, I am a( chocaholic)giggles. I have this only vice, and I well always love dark CHOCOLATE. I need to by into this stock market stuff...Greed is good?Hahahaha. 
Mar 31, 2011 10:59PM
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300m- Wow, did you drop out of Jr. high? You should go back to school and study economics! The price of chocolate and everything else is  tied to the economy and relates to the unequal wealth distribution in this country. The middle class are being squeezed out and taxed to the point of bankruptcy while the rich and big business are getting a free ride. Take your head out of the sand and take a look around!
Apr 1, 2011 3:23PM
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Dee Rice - speaking of dropping out of high school, you used the phrase " unequal distribution of wealth in this country."  Since when is there supposed to be a " distribution of wealth???"  Last I checked, in this country if you want to work hard you can make money.  The problem is that there are too many people that do not want to work hard, or want to only work from 9-5 with an hour lunch break and think they are conquering the world.  Then they sound like you and the rest of the Democrats and want to tax the hell out of the people who are actually running businesses and creating jobs in this country, and redistribute the money with handouts to all the people that have their hands out.  I work 60 - 70 hrs a week, and then 4-6 more on Saturday, and I pay over 45% tax on my income.  Is that getting a free ride ?  Just because someone is hard working, smart, innovative, driven, or any of those, why should they get penalized and have to pay higher taxes just because they make a lot of money ?  I'm pretty sure my 45% is a lot bigger tax % than yours.
Mar 31, 2011 5:18PM
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nochocolate, what are you talking about?  what other candy companies did they buy?
Mar 31, 2011 5:09PM
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where is the competition....   if they all follow in lockstep the fcc should do something about it....  Hersheys probably should not have been able to purchase other candy companies....  
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