Hershey faces Halloween cost pressure as chocolate inflation outpaces food prices

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Hershey halloween chocolate inflation

Highlights

Halloween candy and chewing gum prices rose 7.7% year over year in September, outpacing general food inflation due to higher cocoa and sugar costs.
Hershey lowered its 2026 organic sales growth forecast to 3%, with third-quarter results indicating flattish organic growth in Q4 amid lingering consumer and cost pressures.
NIQ data show Halloween chocolate dollar sales down 7.2% from last year through Oct. 17, resulting in a $33.1 million decline led by milk chocolate.

Chocolate costs and holiday demand trends

As reported by CNBC, higher cocoa and sugar costs are driving above-average inflation in Halloween candy even as overall consumer spending for the holiday is expected to increase. The National Retail Federation says Americans are expected to spend $13.5 billion on Halloween, up from last year’s record $13.1 billion, while consumers remain focused on affordability.

Candy and chewing gum prices are up 7.7% in September from a year earlier, according to Consumer Price Index data, while the sugar-and-sweets category rises 5.5%. Weather disruptions are tightening supply conditions, with unusually wet conditions affecting Brazil’s sugarcane harvest and drought hurting output in other major growing regions.

Chocolate remains under added pressure from cocoa supply disruptions in West Africa, where poor growing conditions affect crops in Côte d’Ivoire and Ghana. NIQ data show Halloween candy sales down 11.7% through Sept. 19, before the decline narrows to 6.7% four weeks later, with chocolate down 7.2% and confection down 5.3%.

Wells Fargo Agri-Food estimates chocolate prices are about 8% higher than last Halloween, with effective transaction prices rising roughly 5% to 8% after promotions. Sector manager David Branch says the fall in cocoa futures from historic highs has not yet translated into cheaper store prices because much of this season’s chocolate was made with cocoa purchased six to 12 months earlier.

Retail shifts and implications for Hershey

Retailers are responding with promotions, including flash deals and deeper discounts at Walmart and Target across candy and other Halloween items. At the same time, shoppers appear to be trading down, with small candy packs of nine ounces or less up 24% in dollar terms and 14% in units, while larger pack sizes are declining, according to NIQ.

Wells Fargo expects consumers to keep buying candy but shift toward value packs and products that use less cocoa, including gummies, sour candy, wafers and caramel. That change in mix comes as Halloween chocolate dollar sales are down 7.2% from a year earlier through the nine weeks ended Oct. 17, with NIQ estimating a $33.1 million decline led by milk chocolate.

For Hershey, analysts are becoming more cautious as consumer pressure and input costs weigh on the outlook. The company lowers its 2026 organic sales growth forecast to 3% from 3% to 3.5% after reporting third-quarter results, implying flattish organic growth in the fourth quarter, according to Jefferies analyst Scott Marks.

Hershey CEO Kirk Tanner says the company is focusing on promotions and value in channels such as convenience as consumers stay under pressure. Marks cuts his price target to $170, while FactSet data show consensus estimates for 2027 earnings falling 3.7% to $9.49 a share.

Rising toy prices ahead of the U.S. holiday shopping season were the focus of our earlier report, showing how import duties and energy- and shipping-related costs have pushed toy inflation above many other categories. That piece also explained why current shelf prices can stay elevated even after tariff rates ease, because retailers and manufacturers are still selling inventory priced under earlier cost conditions, while margins at companies like Mattel and Hasbro remain under pressure.

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