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Sweet fracking: How U.S. oil boom fuels chocolate craving

Wed, 29th Oct 2014 21:38

By Luc Cohen

NEW YORK, Oct 29 (Reuters) - U.S. chocolate demand may getan extra boost from an unlikely source this Halloween: the U.S.shale revolution.

With an abundance of crude oil due to the country's frackingboom pushing average U.S. retail gasoline prices to their lowestin four years, consumers have spare change to buy sweets at gasstation stores, Hershey President and Chief ExecutiveOfficer John Bilbrey said on Wednesday.

"You could say that we benefit because people aren'tspending as much at the pump and they're going inside," Bilbreysaid in a conference call with investors to discuss quarterlyearnings.

To be sure, consumers were still buying snacks on the roadeven when gas prices were much higher in recent years, andHershey does not include fuel costs in its forecasting, Bilbreysaid.

But it's an additional sweet spot for the maker of HersheyKisses and Reese's Peanut Butter Cups after better-than-expecteddemand ahead of Halloween, the biggest U.S. chocolate sellingholiday.

Annual chocolate candy sales add up to as much as $18billion in the United States.

More than a quarter of those this year will be in forecourtretailers, including gas station shops like Shell, andconvenience stores like 7-Eleven, according to marketresearch firm Euromonitor.

That's second only to mixed retailers, which includedepartment stores like Macy's Inc.

Filling a tank up for less encourages consumers to spendmore at convenience stores and boosts overall consumersentiment, said Jeff Lenard, spokesman for the NationalAssociation of Convenience Stores (NACS).

Chocolate may benefit more than other products because it'sconsidered a treat.

"Particularly when we're still dealing with a fragileeconomy, chocolate's considered one of those affordableluxuries," Lenard said.

NACS data show when customers buy gas, more than 20 percentalso stop in the store to purchase snacks, the second-mostcommonly bought product after drinks.

The news is particularly welcome as analysts warn thatretail price hikes caused by soaring dairy and cocoa pricescould hurt demand.

Cocoa futures hit 2-1/2 year highs at the end ofSeptember on fears the Ebola virus might spread to top-producersIvory Coast and Ghana.

Bilbrey warned on Wednesday that consumers would continue tosee higher prices on non-seasonal chocolates in the fourthquarter and 2015. (Editing by Josephine Mason and Gunna Dickson)

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