Hershey, one of the leading chocolate manufacturers, is facing a significant challenge as the trade war escalates and threatens to push chocolate prices even higher. The company is urging the White House to exempt cocoa from tariffs, as it is unable to be grown in the United States.
In a recent statement to investors, Hershey revealed that they anticipate tariffs to cost between $15 million to $20 million in the second quarter. However, as their existing cocoa inventories diminish, the company projects that tariffs could increase costs by up to $100 million in the third and fourth quarters. Despite this potential impact, Hershey has implemented robust mitigation plans to minimize the financial burden.
Michele Buck, the CEO of Hershey, emphasized the importance of seeking an exemption for cocoa from tariffs, as the company heavily relies on imports from the Ivory Coast and Ghana, the world’s top cocoa producers. With President Donald Trump threatening retaliatory tariffs on these regions, Hershey is working with lawmakers and trade groups to advocate for the exclusion of cocoa from these trade measures.
Steve Voskuil, Hershey’s CFO, highlighted the company’s efforts to influence government actions and change tariff policies, particularly concerning cocoa. The tariffs imposed on imported cocoa, along with retaliatory tariffs from countries like Canada, pose a significant challenge for Hershey and other chocolate manufacturers.
The ongoing trade war and high cocoa prices have added to the challenges faced by confectionery companies. Despite price increases in 2024 to offset rising costs of cocoa, the industry continues to grapple with weather-related challenges, diseases affecting cocoa production, and increased consumer demand. While cocoa prices have slightly decreased from their previous highs, they remain elevated, impacting the profitability of chocolate manufacturers like Hershey.
In conclusion, Hershey’s plea for an exemption on cocoa tariffs underscores the importance of fair trade practices and policies that support the sustainability of the chocolate industry. As the company navigates these challenges, it remains committed to delivering quality products to consumers while mitigating the financial impact of trade disputes on its operations.
