Hershey bars. KitKats. Mounds. These are just three of the reasons why I'm a portly fellow. Then again, make that a jolly portly fellow, because, hey, these things are delicious. Oh, and let us not forget Reese's Pieces; let me tell you, E.T. was not out of his extraterrestrial mind when he adopted that candy brand as his personal favorite.
So why do I bring up the subject of addictive chocolate bars? Well, last week Hershey Foods
Price increases are an inevitable fact of corporate life. They do occur, brought on by the usual suspects: energy expenditures, employee costs, and commodity prices. They can also be summoned by world events, as Brian Gorman observed several weeks back when he discussed unrest in the Ivory Coast and its potential negative effect on not only Hershey, but companies such as Cadbury Schweppes
Long-term holders in Hershey stock shouldn't be worried by this event. It's true that any increase is bound to slow the growth of sales; that's just basic supply/demand economics. What investors seek is price increases that keep products compatible with the marketplace at large. As long as the increases can be absorbed as painlessly as possible by purchasers, shareholder value shouldn't see too much of a hit. Of course, we've yet to see how the increased costs of Hershey candies is met by the public, but I don't think the percentages discussed in the release are going to dissuade too many sugar-bar lovers from consumption of Hershey's versions of their favorite junk food.
All companies want -- and must -- maintain as high a premium as possible for their products. And sometimes an expanded premium can be used to encourage consumers to alter their patterns of interaction with a company to allow for generation of higher profits. Rick Munarriz wrote about Disney's
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Fool contributor Steven Mallas owns shares of Disney.