Candy Makers Say Expect Shortages for Valentine’s Day

“There’s a very big effort between now and Valentine’s to get absolutely everything we have in the hands of retailers,” said Hershey Chief Financial Officer Steve Voskuil.

Hershey said it has added production lines recently and hired more workers, but it hasn’t been enough to keep up with America’s appetite for its Reese’s chocolates, Jolly Ranchers candy and other treats. Mr. Voskuil said Hershey has sent salespeople to stores to help restock shelves and the inventory issues vary by retailer.

The candy aisle at the average store is currently out-of-stock of about one-fifth of its items—compared to 12% out-of-stock for the whole store, and a pre-pandemic normal of roughly 7%, according to the IRI CPG Supply Index.

Hershey Chief Executive Michele Buck said the whole industry is having supply challenges, and Hershey’s challenges will persist despite the company adding manufacturing capacity and hiring more workers.

“There’s no end date when I can tell you a switch will flip,” Ms. Buck said. “We will continue to have pressure throughout the year. Under no circumstances will we be out of the woods entirely.”

Consumers also have been buying more sweets, supermarket industry executives said, increasing pressure on candy supplies. Many retailers are carrying fewer sizes and varieties of candy than they used to; some have received incomplete orders for Valentine’s Day despite booking farther in advance.

“We did not receive all of what we ordered with Valentine’s Day candy,” said Mark Griffin, president of B&R Stores Inc. He estimated the chain is receiving under 60% of its candy orders, and said that it’s been tough to get even non-seasonal items like Snickers and Reese’s candies.

The broader food supply chain continues to have hiccups, as U.S. manufacturers and retailers grapple with labor shortages and employee absenteeism. Pet food, cereal and refrigerated dough are among many items in tight supply, grocery executives said, and the candy supply remains tight ahead of Valentine’s Day and Easter.

Big brands are leaving sales on the table and risk losing market share long term if they can’t keep up with demand, analysts said. Hershey said it expects to maintain its market share this year since everyone in the sector is running out of inventory.

Some retailers said they are hustling to secure more sweets. In the Midwest, Festival Foods stores have been ordering about 25% to 30% more candy supplies than usual in recent months and are still experiencing inventory issues, said Randall Munns, chief operating officer of the grocer.

“We already put in orders for Halloween,” he said.

Hershey faced shortages last Halloween, too. Hershey’s Ms. Buck said she recalled seeing lots of picked-over shelves, and the company said both Halloween and the end-of-the-year holidays in 2021 were some of the biggest seasonal sales the company has ever had.

Hershey’s Mr. Voskuil said last year’s sellouts are causing retailers to order sooner for this year’s various holidays and put it on shelves sooner too, which often leads to running out of products ahead of the holiday, like Valentine’s Day or Easter.

Bill Call, the co-owner of Shop’n Save in Maine, said his company has been running low on bagged candies, but hasn’t been able to find other suppliers to offset shortages. Instead, he said his store is spreading out the candy products that he has been able to secure.

Mondelez International Inc., MDLZ 0.06% which makes Oreo cookies and Sour Patch Kids gummies, said it began the new year with low inventory levels in North America because of a strike among its unionized workers last year, and because its contract manufacturers faced labor shortages

“Usually you can get back to a pretty normal inventory situation in a few months, but because of the fact that supply issues continue because of the pandemic, it will take longer for inventory to get back to normal,” said Mondelez Chief Executive Dirk Van de Put last week.

Hershey and Mondelez have cut back on advertising in recent months, to avoid boosting demand while they struggle to fill orders from retailers.

The candy makers, along with other U.S. food makers, are also raising prices to offset some of the higher costs they face for raw ingredients, trucking, labor and packaging. That hasn’t dented demand yet, executives said.

Hershey’s price increases helped the company post adjusted profit that came in 13% higher than a year earlier and topped analyst expectations for the fourth quarter.

Hershey’s stock rose 2% on Thursday morning as it reported sales of $2.33 billion for the quarter, up from $2.19 billion a year ago. That included 3.2% comparable growth in its North America candy business. The company forecast full-year 2022 sales growth of between 8% and 10%.

Write to Annie Gasparro at [email protected] and Jaewon Kang at [email protected]