By Jessica DiNapoli
NEW YORK (Reuters) -U.S. retailers are offering more discounts on Hershey goods ahead of its biggest holiday, Halloween, according to data, as the candymaker hiked prices due to rising costs from tariffs and cocoa inflation.
The discounts come as overall chocolate candy sales per unit were flat in the 12 weeks ended October 5, but prices rose 8%, according to Circana, a market research firm.
The price hikes have prompted some consumers to cut back, forcing confectioners such as rival Mondelez, which makes Sour Patch Kids, another popular Halloween candy, and retailers to turn to discounts.
Cocoa inflation has eased in recent months, but manufacturers are still passing on costs to consumers.
Halloween and seasonal occasions like Easter and Valentine’s Day are especially important for Hershey, Mondelez and privately held Mars because consumers budget for holiday treats.
“It’s make or break for our seasonal business,” said Chantal Butler, president of North American confectionery.
Hershey, set to report earnings Thursday, is among 31 food makers tracked by investment bank Jefferies that had the biggest increase in volume of goods sold with a discount in the four weeks ended October 4, according to a research note that cited Nielsen data.
Hershey did not respond to a request for comment.
“People love to spend in the holidays,” said Katie Thomas, the lead of the Kearney Consumer Institute, an internal think tank at the consulting firm. “But right now, they’ll want the best bang for their buck and are waiting for promotions. They won’t opt out of the holiday.”
Thomas added that consumers, nervous as well about a prolonged U.S. government shutdown, are increasingly aware of the size of the items they are buying, as companies shrink packages to try to keep prices stable, a tactic known as “shrinkflation.”
“It’s not just the price, it’s the value,” she said. “Not only do I not want to pay $30 (for a bag of candy), I don’t want to pay $30 for really small pieces of candy.”
Data provider Datasembly said that Halloween discounts started earlier, were deeper and were offered on more items. By early October, more than half of Hershey candy had been put on sale by a mass retailer, Datasembly said, declining to name the retailer.
On Tuesday, Mondelez CEO Dirk Van de Put warned that some promotions the Oreo cookie maker has offered in recent months have not worked, citing that consumers are “very concerned in general about the economy.”
(Reporting by Jessica DiNapoli in New York; Editing by Sayantani Ghosh and Lisa Shumaker)
Comments