Hershey raises Prices

The increases in commodity prices have had their effects on many consumer products and, given the rally in cocoa prices, it was only a question of time before chocolate prices would follow suit. Last week Hershey announced that it would increase candy bar prices by 11%.

Historically, raising prices has always been the last resort of candy makers. Consumers get used to prices and expect the candy bar at the check out or the convenience store for a specific price.

The original Hershey bar cost a nickel. And Milton Hershey was so proud of that price that he went to great length to keep that price. According to Brenner’s history of Hershey—The Emperors of Chocolate—the company kept the nickel price from 1905 until 1969.

As the cost of ingredients fluctuated, however, the company varied the weight and size of the bar. The original weight was 1.75 ounces. Brenner reports that in the 1920s, the bar weighed 1.25 ounces. By 1968, the bar was down to .6875 of an ounce. Some press reports even compared the Hershey bar to a razor blade.

So it will be interesting to see if weight adjustments will become part of the pricing strategy again. After having introduced king-size bars some years ago, candy makers may resort to selling regular sized bars at king-size prices.

Changing the weight is an old strategy of food manufacturers to hide price increases. I still remember the days when the coffee companies pulled the great switch by reducing the weight of coffee in the regular size can from 16 ounces to 12 or 13 ounces.

The same has happened more recently to ice cream. The half gallon containers were quietly replaced by quart and a half containers but the prices remained the same. For a while, there were two container sizes next to each other selling for the same price.

So look for similar tricks in the candy aisle.

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