- The Washington Times
Thursday, August 4, 2022

The candy industry is warning that chocoholics will pay more for their Snickers, Kit Kats and Hershey bars this Halloween as supply chain shortages lag behind an appetite for sweets that has grown during the pandemic.

In their half-year reports last month, Pennsylvania-based Hershey Co. and Switzerland-based Nestle said pandemic-driven global supply chain disruptions and the Russia-Ukraine war have made cocoa and other ingredients scarcer and more expensive while demand soars.

The maker of Nestle Crunch announced a 6.5% price increase to offset lower profit margins amid “significant and unprecedented cost inflation.” Nestle expects an 8% increase in sales this year, up from its previous 5% estimate.

Hershey said it will be unable to produce enough seasonally decorated Almond Joy, Reese’s Peanut Butter Cups and other treats to keep up with Halloween demand. Data from Refinitiv shows Hershey’s net sales rose more than 19% to $2.37 billion in the quarter that ended July 3.

Mars Wrigley did not respond to a request for comment. The Chicago-based confectioner revealed last week that “ghoulish green” Snickers, Twix and M&Ms will hit retail shelves later this month.

Ashleigh Pollart, a Hershey Co. spokeswoman, said Thursday that all companies in the industry are experiencing supply chain disruptions and soaring demand.

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“These capacity constraints we referenced during [last month’s] earnings call are due to a tremendous increase in consumer demand the past few years,” Ms. Pollart told The Washington Times in an email.

Because Hershey’s seasonal and everyday treats share production lines, she said, the company decided in the spring “to focus on everyday products to improve on-shelf availability in both U.S. and Canada” rather than prioritize Halloween and Christmas items.

Multiple reports have shown more Americans seeking sugary solace since the first pandemic lockdowns in March 2020.

According to Information Resources Inc., U.S. sales of chocolate, non-chocolate candy, gum and mints grew 11.3% year over year to hit $30.3 billion during the 52 weeks that ended July 10. That included a 9.2% growth in chocolate sales and a 14% spike in non-chocolate sales.

During the first months of the COVID-19 pandemic from March 15 to Aug. 9, 2020, the National Confectioners Association reported a 3.8% increase in candy and chocolate sales over the same period in 2019.

According to the nonprofit trade group, chocolate and candy sales rose 11% from 2020 to 2021. Halloween sales are on track to be up 5% this year from 2021.

“People are very excited for the Halloween season, and they plan to incorporate chocolate and candy into their celebrations this fall,” Lauren O’Toole Boland, a spokeswoman for the association, said in an email.

After projections of a candy shortage this Halloween, some shoppers may not wait to see whether store shelves remain stocked in October.

E-commerce company Pattern reported Wednesday that Amazon searches for “Halloween candy” shot up 84% year over year through July.

“As disrupted supply chains continue to create scarcity, a segment of American consumers has become increasingly savvy about making sure they aren’t left without groceries and other staples,” said Hamilton Noel, a data scientist at Pattern.

Peter C. Earle, an economist at the free market American Institute for Economic Research in Massachusetts, said it’s too early to panic.

Bank of America has placed Hershey on its list of “recession-resistant” stocks because of Americans’ steady appetite for sweets. Mr. Earle noted that the company started its Snickers and 3 Musketeers candy bars during the Great Depression.

“Even as prices rise owing to inflation, people are willing to pay higher prices for chocolate and candy. But the Halloween warning makes clear that ‘recession-resistant’ doesn’t also mean ‘supply-chain proof,’” he said in an email.

Other economists said government policies could affect the duration of the problem.

“The candy shortage is just a taste of what’s to come,” said Charles N. Steele, an economist who teaches at Hillsdale College. “I predict these kinds of problems will spread because of policies governments are imposing around the world. Most importantly, these include the push to eliminate fossil fuels and to eliminate fertilizers and pesticides. These constitute a war on modern agriculture.”

Economist Warren L. Coats, a former member of the International Monetary Fund who lives in Maryland, said the industry will recover faster if the federal government leaves it alone.

“Perhaps there is something the government could do to remove barriers to a resolution,” Mr. Coats said Thursday. “But no one has a stronger incentive to resolve the problem than the companies because their profits depend on it.”

• Sean Salai can be reached at ssalai@washingtontimes.com.

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