Hershey 'Shrinkflation': Chocolate Makers' Cost Chaos As Cocoa Reaches $10,000 Per Metric Ton
Portfolio Pulse from Neil Dennis
Cocoa prices have surged to $10,000 per metric ton, doubling in just 50 days, due to weather and disease impacting crops in West Africa. Hershey Co (HSY) and Mondelez International Inc (MDLZ) have warned of the impact on their earnings, with Hershey expecting limited earnings growth this year. The situation has led to 'shrinkflation' for consumers, with chocolate products becoming smaller and more expensive. Nvidia Corporation (NVDA) is mentioned for comparison, having added $1 trillion to its market cap in 67 days of 2024.
March 26, 2024 | 1:19 pm
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NEGATIVE IMPACT
Hershey Co faces challenges due to soaring cocoa prices, expecting limited earnings growth this year.
The doubling of cocoa prices directly impacts Hershey's cost of goods sold, likely squeezing margins and limiting earnings growth as previously warned by the company.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
Mondelez International Inc warns of bottom line risks due to rising cocoa prices, with shares falling slightly in the past three months.
As a major chocolate producer, Mondelez is affected by the increase in cocoa prices, which could lead to higher production costs and impact profitability.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 80
NEUTRAL IMPACT
Nvidia Corporation's market cap growth mentioned for comparison, unrelated to cocoa price surge.
Nvidia's market cap growth is mentioned for comparison purposes only and is not directly related to the cocoa price surge or its impact on the chocolate industry.
CONFIDENCE 90
IMPORTANCE 5
RELEVANCE 10