Although demand for chocolate has been holding up despite inflation, supply chain constraints could impact its availability along with other candy come Halloween. Hershey suggested as much this week when reporting Q2 financial results—including a 12.9% dollar sales increase in its North America confectionary segment.
Because Hershey begins producing Halloween candy in the spring, it faced a balancing act of keeping enough product on-shelf and bulking up for the scary holiday.
It decided to prioritize on-shelf availability.
“And so that was a choice that we needed to make,” Hershey CEO Michele Buck told financial analysts. “We had opportunity to deliver more Halloween, but we weren't able to supply that.”
The pandemic, coupled with the Russia-Ukraine war, have contributed to shortages of confectionary supplies like cocoa, edible oils and other ingredients—a situation also cited by Mondelez International this week.
Although Mondelez managed to grow Q2 and first-half revenue by 13.1% and 10.7%, respectively, it has lost U.S. share “purely because of supply chain constraints” for Nilla, Nutter Butter, Premium and belVita, according to chairman and CEO Dirk Van de put.
“Our supply chain service levels and the performance of our lines are gradually improving,” Van de Put said on a Q2 earnings call.
“And so we are expecting to see some share improvement in North America in the second half of the year.”
As previously reported, Mondelez plans to close its acquisition of snack bar marketer Clif Bar & Co. for $2.9 billion in the second half of the year.
Another big priority is the “renovation” of the 121-year-old Milka brand of chocolates. According to Van de Put, Milka will receive an “upgraded taste profile” and new packaging.
“This initiative represents our largest chocolate brand renovation in 25 years. We are supporting the launch with a fully integrated, 18-month marketing and advertising support program.”