Hershey Balancing Fall, Halloween Packaging

Placing larger focus on longer-season autumn sales

HERSHEY, Pa. -- The Hershey Co. hopes more leaves and fewer ghouls can make for a sweeter Halloween, according to a Dow Jones report.

Hershey this year is putting more of its sweets in seasonal packages that depict leaves and autumn colors, as the maker of Reese's Peanut Butter Cups and Hershey's Kisses tries to avoid last year's pitfall where Hershey put more of an emphasis on Halloween packaging, said the report.

Hershey over-estimated consumers' enthusiasm for spooky-themed candy last year, Dow Jones said, leaving an overhang of Halloween products that had to be sharply discounted, hurting Hershey's profit margins during the busiest period of the year for the candy industry.

Getting the mix right will be key this Halloween, the report said, since consumers will see higher prices whether they load up on candy to hand out to trick-or-treaters or to keep around the house. Hershey in 2011 started implementing what amounts to a nearly 10% price increase on its candy, starting first on everyday versions of chocolates and other candies items, then on seasonal candy this year.

"Sales volume is going to be watched closely to see whether the pricing they've put into place sticks or whether consumers show a reluctance to pay that higher price," Morningstar analyst Erin Lash told the news agency. "Candy tends to be viewed as affordable luxuries that consumers will pay for during the holidays, and this will be a yardstick to see if that is still the case."

Hershey is by no means giving short shrift to Halloween, which is the biggest candy-buying season, followed by Easter, winter holidays and Valentine's Day. Candy makers get about 7% of their annual sales during Halloween, according to the National Confectioners Association, which projects Halloween candy sales will rise about 1% to $2.38 billion this year.

Hershey has 10 new candies out for this season, including the decidedly Halloween-focused Cadbury Screme Egg, a version of the popular candy it sells during Easter. It also has plenty of advertising, including Halloween-specific television ads for Reese's and Kit Kats, as well as in-store sales programs that its spending money on to keep sales humming.

"Hershey still supports Halloween-specific packaging on many products," Ann Lingeris, a company spokesperson, told Dow Jones.

Hershey couldn't provide details on how the split from Halloween to autumn packaging will change from last year, but Lingeris said that they company is placing a larger focus on the latter, in part because those products with autumnal imagery can be sold for a longer stretch, starting as soon as mid-August and going all the way through Thanksgiving. Some of the new seasonal imagery is also on packages of candies that primarily goes in candy bowls all season, like Reese's Pieces or pumpkin-spice flavored Kisses.

Retailers place their seasonal holiday orders far in advance, and Hershey has said that the current tally for the Halloween period, which includes its harvest-themed packages, is meeting its outlook. Hershey hopes to recreate the success it had during Easter this year, where despite higher prices, it gained market share during the season.

A spokesperson for Hershey's candy rival Mars Inc. declined to discuss the privately held company's Halloween plans, though she told the news agency that the maker of M&M's and Snickers has Halloween- and autumn-specific packaging.