Hershey, the U.S. chocolate maker, warned consumers on Thursday that it will likely not be able to meet candy demand during the Halloween season this year as it struggles to increase supply.
The sweet shortage comes as firms and industries across the world struggle to keep up with consumer needs amidst pandemic- and war-related disruptions to the global supply chain.
Candy competitor Nestlé, who produces Kit Kat and Smarties, is facing similar problems due to rising costs, and responded by raising prices for its goods by 6.5 per cent.
Hershey’s chief executive Michele Buck said Thursday that the company “will not be able to fully meet consumer demand,” because of recent challenges with sourcing ingredients for its sweet treats, according to the BBC. Cocoa, edible oil and other food ingredients are in short supply.
She added that particular pressures in Germany, which is facing an energy crisis as Russia curtails gas supplies and the EU aims to restrict energy imports, are driving the company’s problems. Hershey sources equipment and ingredients from the country, which is currently imposing energy-saving measures.
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Hershey is focusing on meeting everyday demand at the expense of the busy holiday season, a move Buck said was a “tough decision.”
The Halloween season in October is Hershey’s busiest and most profitable time of year, making up around 10 per cent of its annual sales.
“We had the opportunity to deliver more Halloween, but we weren’t able to supply that. And we were really producing,” Buck told the BBC.
As a result, trick-or-treaters will likely see fewer Reese’s Peanut Butter Cups, Twizzlers and Jolly Ranchers during Halloween this year.
Despite the likely shortage, Hershey forecasts that sales figures will still top last year, due to price hikes amid resilient demand for chocolate and candy.
Shares rose 2.5 per cent in morning trading after the company lifted its profit and sales forecasts.
Hershey’s net sales rose more than 19 per cent to US$2.37 billion in the last quarter, beating analysts’ estimates of $2.22 billion, according to IBES data from Refinitiv.
While Hershey expects more consumer pushback over higher prices in the second half of the year, the company is relying on price increases to boost growth.
“Historically, Hershey’s sales growth has been driven by higher prices and not necessarily volume … The company is entering this period from a position of strength with that expertise,” CFRA Research analyst Arun Sundaram said.
— with files from Reuters
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