NEW YORK/LONDON, March 26 (Reuters) - Hershey,

Mondelez ( MDLZ ) and other confection-makers are employing

promotions and pitching more non-chocolate Easter treats like

cookies 'n' cream bunnies at a time when soaring cocoa prices

threaten their profits and shoppers balk at high prices.

With shoppers' "impulse buys" of chocolate and candy at

convenience stores and in grocery checkout lines down, according

to industry data, special occasions like Easter and Halloween

are increasingly important to the companies' sales.

Cocoa prices have tripled over the past 12 months

thanks to bean disease in West Africa, which continues to

worsen, meaning companies are not expected to get relief anytime

soon. Sugar prices are also up some 7%.

Chocolate makers set their plans for this Easter last year,

and have said they will hike prices again to cover the cocoa

crunch. The companies face additional pressure on their profit

margins as their hedges protecting commodity costs expire later

this year and next.

But, the price hikes are coming at a delicate time as

inflation-weary consumers are already pushing back.

That makes seasonal sales key. Easter sales of candy in the

United States, the world's biggest chocolate consumer, are

expected to at least reach last year's total of about $5.4

billion, although this will be driven mostly by price increases

not volumes sold, according to the National Confectioners

Association.

Easter is the third-biggest occasion in the United States

for buying chocolate and candies, with Halloween taking the top

spot, followed by the winter holidays, according to the

confectioners association.

"People will buy during the holidays, but they will cut out

impulse buying," through the year, said David Branch, a sector

manager focusing on cocoa at Wells Fargo Agri-Food Institute.

Data from the National Confectioners Association shows that

last year, the volume of chocolate and candy sold for everyday

occasions fell 3.6% compared to 2022. Volumes of chocolate and

candy sold for seasonal occasions like Easter rose slightly by

0.1%.

Branch projects that given the continued inflation in cocoa,

the trend will continue.

Hershey is shipping more non-cocoa treats to retailers this

Easter in addition to its iconic Reese's chocolate bunnies and

eggs. It is introducing a new six-pack of cookies 'n' cream

bunnies, offering full-sized Kit Kat lemon crisp bars and mixing

Haribo gummy bears with chocolate bars in its assortment bags.

Hershey spokesperson Allison Kleinfelter said consumers are

continuing to buy seasonal products because parents want to

preserve traditions like Easter baskets filled with chocolate

bunnies and egg hunts.

The non-chocolate Easter offerings have no connection to

current cocoa prices, she added.

Simon Crowther, marketing director for seasonal

confectionery UK at Mondelez ( MDLZ ) told Reuters the Oreo cookie-maker

has introduced a new "Cadbury Ultimate Egg" range, and a premium

Toblerone "Edgy Egg," aimed at older families and upmarket

shoppers who may be more willing to splurge on chocolate.

PUSHING INVENTORY

U.S. retailers have increased discounts on Cadbury, Reese's,

Hershey's, M&Ms and Lindt this Easter versus last, according to

research analytics firm Dataweave.

Big box store Target ( TGT ) and supermarket chain Kroger ( KR )

are also offering bigger discounts on Easter candy this

year compared to last, according to the firm. At Target ( TGT ) in New

York in early March, Reese's mini eggs unwrapped, another new

product for this season, and bunnies were buy one, get one for

50%.

A Kroger ( KR ) spokesperson said the grocer updated its strategy

to include more frequent promotions on top-selling brand and

pack sizes.

John Ament, an independent consultant and former global

vice president of cocoa at M&Ms maker Mars, said there is no

doubt that chocolate will be more heavily discounted this Easter

compared to last because consumers are weary of price increases.

Chocolate makers have already pushed through price

increases, "So this Easter will be more expensive than last

year, and there's less consumer appetite to spend," he said.

He added that this year's holiday will be tougher than

2023's because of the hikes.

"The category will see slower if any growth in the coming

year," he said.

Chocolate firms tend to hedge their raw material purchases

up to 12 months in advance, and with the bulk of the cocoa

price surge happening this quarter, current chocolate making

costs will come to be seen as low at the end of the year.

Even so, it's getting tougher to push through price hikes.

Data from Nielsen shows the price per unit of chocolate in the

U.S. rose 10.4% in the year to early March, versus a 14.3% gain

in the same period a year earlier.

A Mondelez ( MDLZ )' spokesperson told Reuters that as input costs

rise this year, the company will consider not just price hikes

but "changing the unit weights" of its chocolates - a technique

commonly known as "shrinkflation."

"We've had a couple of years now of strong price increases

in chocolate and you tend to find in the first year, the

elasticity is okay, in the second year it gets worse, and now

we're in a third year, its going to be awful," said Kepler

Cheuvreux analyst Jon Cox.

He said premium chocolate makers like Lindt will

likely fare better because the already high mark-up on their

chocolate means they might be able to hike prices less, in

percentage terms, than regular chocolate makers.

But he added: "Even they will see sales volume pressure, its

not going to be an easy year for them."

Mass-market chocolatiers like Mondelez ( MDLZ ) are also more

likely to invest in brands not tied to cocoa, consultant Ament

said. The Chicago-based company also sells crackers, cookies and

other snacks.