Supply chain disruptions could play a Halloween trick on youngsters who may not see the full bags of candy they expect.
Although West Coast ports aren’t making national news with more than 100 ships unable to dock, the 2022 bottlenecks may be worse than in 2021. Cargo ships have been rerouted to Gulf and East Coast ports and it appears even more are sustaining delays. The cumulative effect of import logjams and the inability to meet demand has chocolate giant Hershey concerned costumed children will be disappointed on Oct. 31.
“We continue to see struggles across the supply chain. (We’re) now starting to see bigger concerns relative to scarcity of ingredients,” Michele Buck, the president and CEO of the Hershey Company, reportedly said. “Seasonal consumer engagement is expected to remain high, and we expect high single-digit sales growth for both our Halloween and Holiday seasons. Despite this strong growth, we will not be able to fully meet consumer demand due to capacity constraints.”
Buck indicated the Pennsylvania-based candy and chocolate manufacturer was forced to make critical decisions early in 2022. The organization chose to keep store shelves stocked as supply chains slowed and ingredients grew difficult to import. Perhaps, hoping the flow of goods and materials would improve, optimism did not prevail.
“That was a choice that we needed to make. We had an opportunity to deliver more Halloween, but we weren’t able to supply that. We were really producing — we begin producing Halloween back in the Spring, and that’s really when we needed to make these key decisions on what we were going to produce,” Buck reportedly said.
A disjointed supply chain and 40-year-high inflation have also affected the price of chocolate and candy. Hershey decided to raise its prices across the board to offset elevated ingredients costs and truck diesel reaching an all-time peak. Hershey’s regular-sized chocolate bars were bumped up by 17 percent, and King-Sized chocolate bars rose by 13 percent in June. Price hikes pushed Hershey’s second-quarter earnings up to a reported $2.3 billion, a 19.3 percent year-over-year gain.
“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 reportedly said.
But thin inventories could result in lower profits come Halloween. October trick-or-treating ranks as the company’s busiest time of year, accounting for upwards of 10 percent of its total annual sales. Hershey produces favorite Halloween treats such as Jolly Ranchers, Twizzlers, Reece’s Peanut Butter Cups, Almond Joy, Kit Kat, York Peppermint Patty, Whoppers, and Mounds, among others. Many of these candies are traditionally distributed in bite-size portions for Halloween. It appears even small children cannot escape the supply chain horror.
Sources:
https://www.abc27.com/hershey/hershey-warns-of-possible-halloween-holiday-candy-shortage/
https://hypebeast.com/2022/7/hershey-ceo-expects-halloween-candy-shortage
https://www.cnbc.com/2022/07/28/trucking-ceos-expect-high-prices-demand-in-second-half-of-2022.html
https://www.trucknews.com/business-management/u-s-shippers-see-worsening-conditions/1003167695/
https://www.marthastewart.com/8296159/hershey-halloween-candy-shortage-2022
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