Hershey Warns of Candy Shortage for the Holidays

The company says raw ingredient and supply chain woes are to blame.

August 01, 2022

Halloween Candy Bucket

ALEXANDRIA, Va.—The Hershey Company warned that it may not meet the demand for the Halloween and Christmas holidays this year due to a scarcity of raw ingredients and difficulties in securing suppliers, reports Reuters.

Those issues, along with the company's focus on meeting demand during non-holiday periods, will likely lead to a candy shortage this Halloween, according to Hershey CEO Michele Buck; however, the company is still expecting candy sales to exceed last year’s results.

The Halloween season is Hershey’s biggest time of the year—the company sees 10% of its annual sales during that time period. Hershey’s net sales rose over 19% to $2.37 billion in the fiscal quarter ended July 3, surpassing analysts’ estimates of $2.2 billion.

The company raised its 2022 adjusted profit per share growth forecast to 12% to 14%, up from 10% to 12%. Hershey also now expects net sales to grow between 12% and 14%.

"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 told Reuters.

Candy and Snacks at Convenience Stores

Hershey said its U.S. candy, mint and gum retail takeaway for the 12-week period ended July 17, 2022 in the multioutlet plus convenience store channels rose 5%. “Consumer demand and unit velocities remained steady with strength in take-home chocolate and sweets, while growth in unit pricing drove year-over-year gains. Hershey's take-home chocolate increased 6.6% in the latest period as at-home consumption remained strong and above pre-pandemic levels.” Hershey’s U.S. salty snack sales also showed strong growth amid “consumers’ demand for convenience and on-the-go snacking along with the company’s assortment strategy,” Hershey reported.

Candy and salty snacks continue to dominate c-store inside sales, according to Tim Young, former category marketing manager, Newcomb Oil, and current senior category manager—packaged beverage/alcohol, at MAPCO Express.

“Collectively they both put up huge numbers,” said Young during the NACS State of the Industry Summit in April. “Both categories are in the top 10 in sales and in gross profit dollars, with candy delivering the third-highest gross margin percentage of all the merchandise categories behind ice and health and beauty care. Both candy and salty snacks drive trips, and they help build baskets.”

See how these two categories fared in 2021 in NACS Magazine.