Those with a sweet tooth could be in trouble this fall. There might not be enough candy for the Halloween and Christmas holiday seasons. Don’t blame the Great Pumpkin or the Grinch, however. Rather it is Vladimir Putin, and his invasion of Ukraine, that could mean less holiday-themed candies.
Candy maker Hershey Co. announced on Thursday that it would fall short of meeting demand, citing scarcity of raw ingredients and difficulties in securing suppliers. Covid-19-related global supply chain disruptions, as well as the ongoing Russia-Ukraine War, have put a crunch on the supplies of cocoa, edible oil, and other food ingredients. That has impacted the production lines of packaged food companies around the world, Reuters reported.
“We will not be able to fully meet consumer demand,” including for Halloween, warned Hershey CEO Michele Buck via a statement following the release of the company’s second-quarter results.
Bittersweet News
Demand for sweets actually surged during the pandemic, but it has remained especially high. At the same time, Halloween has grown steadily in recent years – and Americans now spend some $10.14 billion on Halloween-related purchases, including candy.
Most years that would be music to the ears of candy makers, but not with the current supply chain woes still largely unresolved. This doesn’t actually mean that there could be bare shelves, however, and Hershey certainly isn’t suffering. In fact, the company reported double-digit sales growth in the quarter, compared to last year.
Hershey’s net sales rose over 19% to $2.37 billion in the quarter ended July 3, beating analysts’ estimates of $2.22 billion, according to IBES data from Refinitiv.
Supply and Demand
Yet, the issue is that demand is so great it can’t keep up – much like what the U.S. firearms ammunition industry suffered through last year.
Hershey largely uses the same manufacturing lines for its regular and seasonal products, which means it can’t ramp up production of both regular sweets and Halloween or holiday items. Instead, it must opt to do one or the other – especially as the production of Halloween candy typically begins in the spring.
“We had a strategy of prioritizing everyday on-shelf availability,” Buck said during an analyst call discussing the company’s second-quarter results.
“That was a choice that we needed to make,” she continued. “It was a tough decision.”
Hershey’s CEO also said that as it faces supply issues, it could lose ground to other competitors, such as Mars Wrigley, the maker of the popular M&Ms and Skittles, at least during the coming Halloween season. Of course, Hershey is far from the only company facing continuing disruptive supply chain issues. Many manufacturers of sweets have faced skyrocketing demand for their products since the pandemic, and are now struggling to keep up with demand for the most popular items.
In fact, the issue has been so great that it was announced that Klondike might cease production of its Choco Taco ice cream treat after more than 40 years, and instead will focus on other products. While The Wall Street Journal reported that the popular ice cream truck favorite could possibly make a return, at least for the rest of summer, the Choco Taco might be a rare sight. It might not be the only sweet to suffer either. Dentists are sure to rejoice.
A Senior Editor for 1945, Peter Suciu is a Michigan-based writer who has contributed to more than four dozen magazines, newspapers and websites. He regularly writes about military hardware, firearms history, cybersecurity and international affairs. Peter is also a Contributing Writer for Forbes. You can follow him on Twitter: @PeterSuciu.
