Cocoa prices drive another price hike at Hershey

Scott Olson/Getty Images News

Hershey (NYSE:HSY [https://seekingalpha.com/symbol/HSY]) is raising prices for the second time in a little over a year, citing persistently high cocoa costs that will drive a double-digit increase in candy prices.

Although cocoa prices are off their historically high $12,000/metric ton cost, the bean continues to trade hands above $8,000/metric ton, a level that most analysts believe will remain in the near future due to adverse weather conditions in Western Africa last year. Cote d’Ivoire, Nigeria, Cameroon, and Ghana control more than 70% of the global cocoa supply.

Last August, Hershey (NYSE:HSY [https://seekingalpha.com/symbol/HSY]) implemented a price increase due to escalating cocoa prices after absorbing much of the higher cost.

“We’ve absorbed a lot of inflation already, but we do believe we need to pass some of it on,” CEO Michele Buck said last summer.

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