{"id":6344,"date":"2023-10-28T09:53:40","date_gmt":"2023-10-28T09:53:40","guid":{"rendered":"https:\/\/infundpros.com\/business\/the-stakes-are-high-for-hershey-this-halloween-weekend\/"},"modified":"2023-10-28T09:53:40","modified_gmt":"2023-10-28T09:53:40","slug":"the-stakes-are-high-for-hershey-this-halloween-weekend","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=6344","title":{"rendered":"The stakes are high for Hershey this Halloween weekend"},"content":{"rendered":"
\n

\n Last year, customers did their Halloween shopping early. But this year, they\u2019re taking their time.\n <\/p>\n

\n That means that this weekend, Hershey \u2014\u00a0which makes Reese\u2019s, Kit Kat (in the US), Twizzlers and more \u2014 is counting on shoppers to load up on candy so it can meet its goals. And with regular chocolate sales slowing, the stakes are high, especially as cocoa prices soar.\n <\/p>\n

\n \u201cConsumers have returned to purchasing their trick-or-treat candy closer to Halloween after supply chain and availability concerns spurred earlier purchases last year,\u201d Hershey CEO Michele Buck said Thursday in prepared remarks discussing the company\u2019s third quarter results.\n <\/p>\n

\n \u201cWith Halloween next Tuesday, we still have several important selling days to go.\u201d\n <\/p>\n

\n It\u2019s too soon to tell exactly how things will shake out this year. But earlier this month, things were \u201coff to a little bit of a rocky start,\u201d said Dan Sadler, a principal of client insights at <\/strong>consumer research firm <\/strong>Circana with a specialty in confections.\n <\/p>\n

\n 2021 was a great year for Halloween candy sales, he said, as people were eager to celebrate after Covid shutdowns. Last year was worse. And early this season, sales \u201chave lagged even last year\u2019s off performance,\u201d he said. \u201cWe are seeing both chocolate and non-chocolate performance down a little bit.\u201d\n <\/p>\n

\n There\u2019s still time to make up the gap, especially as more people have been making holiday purchases later in the season. And this year, for Hershey at least, there won\u2019t be any supply issues.\n <\/p>\n

\n Last summer, Hershey warned that it wouldn\u2019t be able to meet demand for Halloween. But for this season, \u201cshelves are full,\u201d said Buck. And so far, she said, trends are in Hershey\u2019s favor. \u201cHershey Halloween retail sales to date are up slightly versus prior year and we are outperforming the category,\u201d she said.\n <\/p>\n

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\n Figuring out how much candy to pump out for the holidays is a delicate business. Food makers want to make the right amount: Too little product could leave shoppers discouraged and reaching for a competitor\u2019s brand. Too much means excess inventory that has to be sold off at a discount. Plus, retailers are constantly evaluating which items get how much shelf space, and a disappointing season could convince them to shrink a particular company\u2019s allotment.\n <\/p>\n

\n The holiday season is particularly important for candy brands. For Hershey, About 25% to 30% of Hershey\u2019s business comes from holidays, including Halloween, each year.\n <\/p>\n

\n And Hershey\u2019s regular chocolate sales aren\u2019t doing so well, putting extra pressure on Halloween items\n <\/p>\n

\n \u201cWithin North America Confectionery, everyday chocolate sales growth slowed in the third quarter,\u201d said Buck.\n <\/p>\n

\n Net sales of the company\u2019s North America Confectionery segment, which includes candy, mint and gum, grew 9.9% in the third quarter, year-over-year. But the increases were driven by an 11.1% spike in prices. Volumes in that period declined, a sign that people are spending more but buying less. Still, Hershey, which also owns snack brands like Dot\u2019s Pretzels and Pirate\u2019s Booty,\u00a0beat Wall Street\u2019s expectations in the quarter. But\u00a0its stock fell nearly 3% on Friday.\n <\/p>\n

\n For a while, customers didn\u2019t seem to care much about higher chocolate prices. But certain factors are making them tighten their belts.\n <\/p>\n

\n \u201cIt is a different time today,\u201d Buck said during an analyst call Thursday. \u201cWe know that value and affordability continue to be top of mind for consumers as budgets are stretched.\u201d Higher interest rates, the return of student loan repayments and less financial assistance from government programs are prompting people to spend less, she said.\n <\/p>\n

\n To reach these consumers, Hershey has been increasing its focus on selling at dollar stores, as well as discount outlets and club locations, Buck said, and is exploring other options like selling smaller sizes at less expensive prices.\n <\/p>\n

\n Overall, US candy sales are still growing. In the year through September 30, dollar sales were up 10.7% in retail, according to retail sales data from NIQ. But unit sales fell about 2.8%. In the chocolate category, sales were up but units were down 5.1%.\n <\/p>\n

\n With consumers more sensitive to pricing, it would make sense for companies like Hershey to keep prices steady.\n <\/p>\n

\n Executives at Hershey noted that pricing is moderating, and that the brand hasn\u2019t announced any additional price hikes. But holding prices steady may come at a cost, as cocoa prices soar.\n <\/p>\n

\n Over the past year, cocoa\u2019s wholesale prices have been steadily rising, due to strong demand and a supply crunch caused by poor yields.\n <\/p>\n

\n \u201cOverall, compared to the same period a year ago, cocoa prices remained significantly high for the last month of the 2022\/23 season,\u201d according to the International Cocoa Organization\u2019s monthly report for September. \u201cA deficit of around 100,000 tonnes is currently estimated for the 2022\/23 season which just ended,\u201d the report said.\n <\/p>\n

\n Hershey has long contracts for commodities like cocoa, giving it the ability to secure prices even in a volatile market. But this year, the company has \u201cless visibility\u201d into the market, said CFO Steve Voskuil. The higher costs could potentially lead to more price increases.\n <\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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