Hershey Raises Wholesale Prices By Nearly 10 Percent

Over the next several months, Hershey's products will cost more at the retail level. The company raised wholesale prices by nearly 10 percent this week because commodity prizes are squeezing the industry. Cocoa and sugar prices are through the roof to name a couple of the expensive ingredients that go into candy.

MARY LOUISE KELLY, host:

Spring is normally one of the sweetest seasons for the candy industry. But there's anxiety in the air this Easter. The country's biggest chocolate maker is raising prices for the first time in years. NPR's Joel Rose reports.

(Soundbite of ad)

Unidentified Woman: Pure joy, pure delicious chocolate, pure Hershey.

JOEL ROSE: Pretty soon all that purity is going to cost you a little bit more. Hershey's is raising wholesale prices for most of its products by nearly 10 percent. Larry Graham is the president of the National Confectioners Association. He says rising commodity prices are squeezing the entire industry.

Mr. LARRY GRAHAM (National Confectioners Association): Cocoa prices are through the roof, sugar is through the roof, even milk and nuts are high. So yup, there's been a lot of pressure on manufacturers to get their candy out and to still make a profit.

ROSE: The reasons for rising commodity prices vary, from a dismal peanut crop to a civil war in cocoa-rich Ivory Coast. When Hershey's officials announced the wholesale price hike last month, they promised that chocolate Easter bunnies won't cost any more this year. Retail prices aren't expected to rise for months. And even then, Morningstar analyst Erin Lash says most people probably won't change their behavior much.

Ms. ERIN LASH (Stock Analyst, Morningstar): They might go from a king-size bar down to a standard-size bar, for example. But they won't necessarily trade out of the brand or the category.

ROSE: If the past is any guide, Lash says other chocolate makers are likely to follow Hershey's lead and raise their prices too.

Joel Rose, NPR News, Philadelphia.

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