UPDATE 3-Hershey's profit beats estimates, price hikes help

* EPS $0.38 before items vs Wall St $0.35 view

* Stands by 2009 earnings forecast

* Says gained market share in U.S.

* Shares rise 3.2 percent (Adds company, analyst comments, byline)

By Brad Dorfman

CHICAGO, April 23 (Reuters) - Hershey Co (HSY.N) posted a higher-than-expected rise in quarterly profit on Thursday as the chocolate maker increased its market share despite raising prices.

The maker of Hershey's Kisses and Reese's Peanut Butter Cups also stood by its forecast calling for earnings per share to increase this year, but for the gain to be less than the company's long-term goal of 6 percent to 8 percent.

Hershey took a 10 percent price increase in August to help offset rising costs for commodities such as cocoa.

While the price increase helped lift profit in the quarter, the company expects to see a greater impact later this year, since it had to honor earlier pricing agreements with retailers on candy for the Valentine's Day and Easter seasons.

Hershey said the price increase did not hurt volume as much as expected in the first quarter. It is also spending more to support its brands as prices go up, with advertising costs expected to rise 20 percent to 25 percent this year.

The company has also been trying to gain market share against rivals like Mars Inc, which bought Wm Wrigley Jr Co in October to become the world's largest confectionary company.

Consumers have also shifted more to mainstream chocolates from premium brands, a move that has helped Hershey.

"Obviously, they sell a lot more product in that mid-to-low-priced range," Edward Jones analyst Jack Russo said.

Hershey said first-quarter profit rose to $75.9 million, or 33 cents a share, from $63.2 million, or 28 cents a share, a year earlier.

Excluding one-time charges from the overhaul of Hershey's supply chain, earnings were 38 cents a share, up from 37 cents a year earlier. Analysts on average had forecast 35 cents, according to Reuters Estimates.

Hershey said its U.S. market share rose 0.5 percentage points in retail channels where such data is monitored.