Hershey Cuts Candy Varieties

Chocolate giant looking for alternatives as trucking shortages and cocoa prices cause financial obstacles.

May 04, 2018

HERSHEY, Pa. – Hershey Co. is cutting out various sizes and varieties of candy as manufacturing becomes too expensive and complex. The company’s profit margin has been in flux since a trucking shortage has made delivery difficult and costly and cocoa prices have increased nearly 40% over the past year.

Reports say the company’s first consideration will be cuts to holiday assortments it makes for specific retailers. Currently, business plans require delivery to 500 different display styles to stores. It was initially a way to drive revenue in new markets, but Buck said it created more complexity than efficiency.

"There can be excess items that are not driving incremental, profitable growth," said Michele Buck, CEO. "We just have to get after those."

Hershey may instead focus on its core brands, including the Hershey bar, Kit Kat and Reese’s. In March, the company broke ground on a $60 million expansion of its Kit Kat manufacturing plant in Hazelton, Pennsylvania.

Sales rose 4.9% last quarter, thanks to new investments in smaller brands and new products. But the upcoming cuts are expected to decrease sales in the second half of the year, prompting annual sales to only rise 5% instead of a previously projected 7%. Hershey recently acquired Amplify Snack Brands, maker of SkinnyPop, for $1.6 billion in a hope to become a broader snacking company.

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