The Hershey Co., Hershey, PA, announced, on July 15, an increase in wholesale prices across the majority of its U.S., Puerto Rico and export portfolio.
A weighted average price increase of approximately 8% across the company’s instant consumable, multipack, packaged candy and grocery lines became effective July 15. The changes will help offset part of the significant increases in Hershey’s input costs, including raw materials, packaging, fuel, utilities and transportation, which the company expects to incur in the future.
“Over the last year key input costs have been volatile and remain at levels that are above historical averages,” says Michele G. Buck, president, North America. “Commodity spot prices for ingredients such as cocoa, dairy and nuts have increased meaningfully since the beginning of the year. Given these trends, we expect significant commodity cost increases in 2015. We are a gross margin focused company and remain committed to our consumer-centric business model of bringing insights to retailers that will enable us to grow our business and the category. During the transition period, we will support our brands with higher levels of investment, including merchandising, programming, advertising and innovation, that will benefit Hershey and the category.”
Direct buying customers will be able to purchase transitional amounts of product at price points prior to the announcement during the four-week period through Aug. 12, 2014. The company does not expect seasonal net price realization until Halloween 2015.
Given this timing, the company does not expect its July 15 announcement to have a material impact on its financial results in 2014. It expects that the majority of the financial benefit from this pricing action will impact earnings in 2015.
Hershey’s expects full-year 2014 net sales growth to be around the low end of its long-term 5-7% target. The company anticipates 2014 adjusted earnings per share-diluted growth to be around the low end of its long-term target of 9-11%.
Source: Business Wire
