USA – Chocolate giants Hershey and Mondelez International are gearing up to address the recent surge in cocoa and sugar prices as they prepare to unveil their first-quarter results
Both companies have been grappling with elevated costs over the past few quarters, which have led them to pass on some of the burden to consumers through price hikes.
Cocoa prices, which have nearly tripled in value this year, currently constitute approximately 20% of Hershey’s cost-of-goods-sold (COGS) and around 10% of Mondelez’s COGS.
However, the recent sharp increase in cocoa prices, driven by supply shortages caused by droughts, erratic rainfall, and crop diseases in key cocoa-producing regions, could pose further challenges for these industry giants.
In addition to cocoa, sugar prices have also experienced a notable spike in recent months, adding to the cost pressures faced by Hershey and Mondelez.
This puts both companies under pressure to reassure investors and stakeholders about their strategies for managing the impact of soaring cocoa and sugar prices while maintaining their market competitiveness.
According to Sean King, an analyst at Columbia Threadneedle Investments, which holds shares in both Hershey and Mondelez, investors are closely watching to see how consumers are responding to the higher chocolate prices in the market and how this might impact the companies’ future pricing strategies.
In their 2023 financial reports, Mondelez revealed robust performance metrics, including a 14.4% increase in net revenues for the full year, driven by organic net revenue growth of 14.7%.
Similarly, Hershey reported annual revenue of $11.165 billion for 2023, marking a 7.16% increase from the previous year.
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