Hershey said it is running low on Valentine’s Day candy this year, thanks to a shortage of labor and factory capacity. Many grocery shelves already are bare where heart-shaped chocolates should sit, and Hershey said it would likely stay that way leading up to the holiday.
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. 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 20% of its items—compared to 12% out-of-stock for the whole store, reports The Wall Street Journal (Feb. 4, 2022). The whole industry is having supply challenges. Consumers also have been buying more sweets, 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.
The B&R Stores chain is receiving under 60% of its candy orders. 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. 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, and the candy supply remains tight ahead of Valentine’s Day and Easter.
Hershey and some competitors 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.
Classroom discussion questions:
- In Supp. 7 of your Heizer/Render/Munson text, we discuss tactics for matching capacity to demand. Which apply in this situation?
- What is the long-term solution?