Hershey Lowers 2025 Profit Outlook | World News | WION Climate Tracker

Summary

Chocolate prices are rising sharply, affecting both consumers and major companies like Hershey, Mars, and Mondelez. Climate-related issues and shrinking West African cocoa production have caused global cocoa stockpiles to drop 36% year-on-year, leading to higher costs and tighter supply chains. Mondelez predicts a 10% drop in profits, and gross margins are falling, while demand trends show signs of slowing in North America. Improved rainfall in Ghana and the Ivory Coast offers hope for future harvests, but US cocoa inventories remain at a 21-year low, leaving the industry to face an uncertain 2025 with fluctuating supply, pricing pressures, and changing consumer behavior.

Takeaways

• 🍫 Chocolate prices are rising, affecting both consumers and major chocolate companies like Hershey and Mondelez.
• 📉 Hershey's forecasted earnings per share are below analyst expectations for 2025.
• 💰 Mondelez predicts a 10% drop in annual profit, significantly worse than Wall Street projections.
• 🌍 Climate change is a major factor driving cocoa production declines.
• 🌱 West African cocoa production is shrinking for the fourth consecutive year.
• 🌬️ Haritan winds have caused severe damage to cocoa crops, worsening supply issues.
• 📊 Global cocoa stockpiles are down 36% year-over-year, creating higher costs and tighter supply chains.
• 📉 Mondelez shares fell nearly 6% after the profit warning, while Hershey rose slightly in pre-market trading.
• 📉 Cocoa prices recently dropped to a one-month low, hinting at slowing demand, especially in North America.
• 🌧️ Recent rainfall in Ghana and the Ivory Coast is helping cocoa tree growth, potentially improving future harvests.
• ⚠️ US port cocoa inventories are at a 21-year low, highlighting persistent supply concerns.
• 🔄 The chocolate industry faces an uncertain 2025 due to fluctuating supply and shifting consumer demand.

Q & A

Why are chocolate prices increasing?

Chocolate prices are rising due to a shortage of cocoa, caused by declining production in West Africa and extreme weather conditions like the Haritan winds.

Which companies are mentioned as being affected by cocoa shortages?

Hershey and Mondelez (maker of Cadbury) are specifically mentioned as facing higher costs and potential profit declines due to cocoa shortages.

What is Mondelez's forecast for 2025 profits?

Mondelez has warned of a 10% drop in annual profit, which is significantly worse than Wall Street's projections.

How has Hershey’s stock reacted to the situation?

Hershey's stock rose in pre-market trading despite stronger-than-expected results and overall challenging conditions.

What impact have Haritan winds had on cocoa production?

Haritan winds, the worst in six years, have dried out cocoa trees and damaged crops, contributing to lower cocoa yields.

How much have global cocoa stockpiles declined?

Global cocoa stockpiles are down 36% year-on-year, increasing supply pressure on chocolate manufacturers.

What recent trend in cocoa prices might indicate a shift in demand?

Cocoa prices recently dropped to a one-month low, suggesting that chocolate demand may be slowing, especially in North America.

How might weather in Ghana and the Ivory Coast affect cocoa supply?

Improved rainfall in Ghana and the Ivory Coast is aiding cocoa tree growth, raising hopes for a better harvest and potential relief in supply shortages.

What are the current U.S. cocoa inventory levels?

Cocoa inventories at U.S. ports have fallen to a 21-year low, maintaining supply concerns for the chocolate industry.

What overall challenges does the chocolate industry face in 2025?

The industry faces high costs, tight supply chains, fluctuating demand, and uncertainty due to both climate impacts and market trends.

How are consumers reacting to higher chocolate prices?

Some consumers, particularly in North America, are seeking cheaper alternatives, which may contribute to a slowdown in chocolate demand.