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Hershey warns of looming Halloween candy shortage

Daniel Acker/Bloomberg via Getty Images

The Hershey Company – the fifth-biggest candy company in the world in 2021 – is sounding the alarm that they will experience a Halloween candy shortage this year.

The Hershey Company warned that it would not be able to supply enough candy for Halloween and the Christmas holiday season. The candy company blamed a scarcity of raw ingredients on the insufficient supply.

Reuters reported, "Pandemic-induced global supply chain disruptions and the Russia-Ukraine war have crunched supplies of cocoa, edible oil, and other food ingredients, pinching production lines of packaged food companies around the world."

Hershey Chief Executive Officer Michele Buck said on Thursday, "We will not be able to fully meet consumer demand due to capacity constraints."

Buck said that the company sources a great deal of its equipment and supplies from Europe – which has faced an economic downturn because of its reliance on energy from Russia. The invasion of Ukraine has also put a strain on getting products such as cocoa and edible oil.

Buck also noted that despite the candy shortage, the company expects sales to top last year still.

"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.

The Hershey Company saw its net sales rise more than 19% in the second quarter – raking in $2.37 billion compared to estimates of $2.22 billion.

The Halloween season is Hershey's best-selling time of the year – comprising approximately 10% of the company's annual sales.

The 128-year-old company manufactures some of the most beloved Halloween candy – including Hershey's Chocolate Bars, Reese's Peanut Butter Cups, Kit Kats, Mounds, Good & Plenty, Bubble Yum, Twizzlers, Jolly Ranchers, Whatchamacallits, Milk Duds, 5th Avenue, and Hershey's Kisses.

On Thursday, food behemoth Nestle said it raised prices by 6.5% in the first half of 2022 because of an "unprecedented" rise in costs.

Nestle – the world's largest food company – hiked up prices in North America by 9.8%.

Nestle CEO Mark Schneider said, "We limited the impact of unprecedented inflationary pressures and supply chain constraints on our margin development through disciplined cost control and operational efficiencies."

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