BY BENJAMIN MIRASKI, MEDILL NEWS SERVICE
The Hershey Company [[HSY]] announced today that it will raise prices on its instant consumable, multi-pack and packaged candy lines by 11 percent.
This is nothing new in the food industry. Companies have been raising prices to keep pace with commodity price inflation and Hershey is no exception.
From David West, president and CEO of the Hershey Company:
Market prices for ingredients such as cocoa, corn sweeteners, sugar and peanuts are up 20 to 45 percent since the beginning of the year. As such, in 2009 we expect our commodity cost increase to be more than double the 2008 increase. Execution of commodity hedging strategies to firm up our 2009 commodity cost profile will add approximately $10-12 million, or roughly $0.03 per share, to our initial estimate of about a $100 million increase in 2008 raw material costs. This additional increase, as well as the timing and slightly higher trade promotion expense related to the price increase, will be reflected in our third quarter results.
This will just add more to the already high price of candy which I looked at in May and June as a reaction to the passage of the farm bill and its continuation of the sugar price support program. Since the beginning of 2007, the price of candy and gum has risen 8 percent according to the consumer price index data compiled by the Bureau of Labor Statistics.
Photo of Hershey chocolate by Bntal3nabi used under a Creative Commons License.