Hershey Co, Mondelez International Inc and other confectionery makers are employing promotions and pitching more non-chocolate Easter treats such as cookies ‘n’ cream bunnies at a time when soaring cocoa prices threaten their profits and shoppers balk at high prices.
Cocoa prices have tripled over the past 12 months thanks to bean disease in West Africa, which continues to worsen, meaning companies are not expected to get relief anytime soon. Sugar prices are also up about 7 percent.
Chocolate makers set their plans for this Easter last year, and have said they would hike prices again to cover the cocoa crunch. The companies face additional pressure on their profit margins, as their hedges protecting commodity costs expire later this year and next.
Photo: AFP
However, the price hikes are coming at a delicate time as inflation-weary consumers are already pushing back.
Easter is the third-biggest occasion in the US for buying chocolate and candies, with Halloween taking the top spot, followed by the winter holidays, the National Confectioners Association said.
“People will buy during the holidays, but they will cut out impulse buying” through the year, said David Branch, a sector manager focusing on cocoa at Wells Fargo Agri-Food Institute.
Association data showed that last year, the volume of chocolate and candy sold for everyday occasions fell 3.6 percent compared with 2022. Volumes of chocolate and candy sold for seasonal occasions like Easter rose slightly by 0.1 percent.
Hershey is shipping more non-cocoa treats to retailers this Easter in addition to its iconic Reese’s chocolate bunnies and eggs. It is introducing a new six-pack of cookies ‘n’ cream bunnies, offering full-sized Kit Kat lemon crisp bars and mixing Haribo gummy bears with chocolate bars in its assortment bags.
Consumers are continuing to purchase seasonal products, because parents want to preserve traditions like Easter baskets filled with chocolate bunnies and egg hunts, Hershey spokesperson Allison Kleinfelter said.
The non-chocolate Easter offerings have no connection to current cocoa prices, she added.
Simon Crowther, marketing director for seasonal confectionery UK at Mondelez, said that the Oreo cookie-maker has introduced a new “Cadbury Ultimate Egg” range, and a premium Toblerone “Edgy Egg,” aimed at older families and upmarket shoppers who might be more willing to splurge on chocolate.
John Ament, an independent consultant and former global vice president of cocoa at M&Ms maker Mars Inc, said there is no doubt that chocolate would be more heavily discounted this Easter compared with last year, because consumers are weary of price increases.
Chocolate makers have already pushed through price increases, “so this Easter will be more expensive than last year, and there’s less consumer appetite to spend,” he said.
He added that this year’s holiday will be tougher than last year’s because of the hikes.
“The category will see slower if any growth in the coming year,” he said.
“We’ve had a couple of years now of strong price increases in chocolate and you tend to find in the first year, the elasticity is okay, in the second year it gets worse, and now we’re in a third year, its going to be awful,” said Kepler Cheuvreux analyst Jon Cox.
He said premium chocolate makers like Lindt would likely fare better, because the already high mark-up on their chocolate means they might be able to hike prices less, in percentage terms, than regular chocolate makers.
However, he added: “Even they will see sales volume pressure, its not going to be an easy year for them.”
Mass-market chocolatiers like Mondelez are also more likely to invest in brands not tied to cocoa, consultant Ament said.
The Chicago-based company also sells crackers, cookies and other snacks.
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