Trick-or-treaters may be missing some of their favorite Halloween candy this year, as the maker of Reese’s Peanut Butter Cups, Kit Kats, Hershey’s Kisses, Mounds and Almond Joy has warned that it won’t be able to meet consumer demand this fall.
And Hershey says that the shortage is expected to run into the December holidays, as well. Boo, and bah humbug!
“Seasonal consumer engagement is expected to remain high, and we expect high single digit sales growth for both our Halloween and holiday seasons,” said Hershey Co. HSY, +2.39% CEO Michele Buck in prepared remarks for the company’s second-quarter earnings call this week. “Despite this strong growth, we will not be able to fully meet consumer demand due to capacity constraints.”
Like many manufacturers and distributors, Hershey has been hit by supply chain disruptions related to the pandemic and the war in Ukraine this year, which has made some ingredients scarce, even as inflation has raised the price of dairy products needed to make its signature chocolate.
Adding to those challenges, many of Hershey’s everyday and seasonal products are made on the same manufacturing lines, Buck said, and the company made the difficult decision to prioritize the on-shelf availability of everyday candies (the chocolates and treats enjoyed year-round), which was “critical to enable us to increase advertising and merchandising levels” to drive growth and keep Hershey competitive with other candy brands in stores.
But the resulting bottleneck at the manufacturing level means there may be a shortage of seasonal and “fun-size” Halloween and holiday candies from Hershey.
That’s especially bad news considering Hershey’s Reese’s Peanut Butter Cups are consistently voted among the most popular Halloween candies in industry polls. The Reese’s Peanut Butter Cups ranked No. 1 on CandyStore.com’s list of most popular Halloween candies in the country last year, and Hershey’s Kisses also made the top 10.
And when Hershey dropped a giant 3.4-pound Reese’s Peanut Butter Cup pie for $45 for Thanksgiving last November, it sold out in less than two hours.
What’s more, Halloween spending hit an estimated $10.14 billion last year, according to the National Retail Federation, which hasn’t released its 2022 projections yet. And that included Americans dropping $3 billion on candy, alone. So if Hershey can’t meet demand, that opens up the door for confectionary competitors like Mars Inc. (which makes M&M’s, Skittles, Snickers and Starburst) and Mondelez International Inc. MDLZ, +0.19% (Sour Patch Kids) to grab a bigger piece of that pie.
And consumers are already getting into the Halloween spirit, even though we’re still sweating in the dog days of summer. Home Depot HD, -0.45% has released its Halloween home décor online, including its viral $299, 12-foot skeleton, Skelly, which has been a seasonal sensation since 2020. Read about why shoppers aren’t scared of Halloween spending here.
It makes for a bittersweet Q2 earnings report for Hershey this week. The company reported second-quarter net income of $315.6 million, or $1.53 per share, up from $301.2 million, or $1.45 per share, last year. And Hershey HSY, +2.39% shares are up about 19% for the year to date.