What's Happening?
Hershey, a leading confectionery and snacks company, is adjusting its pricing strategy to address the ongoing impact of cocoa inflation. The company has incorporated a ten percentage point increase in pricing into its 2026 fiscal year sales revenue guidance, following a six-point increase the previous year. This adjustment comes as Hershey aims to recover from cocoa cost inflation that was not fully addressed in the prior year. The company experienced a 2% decline in confectionery volume/mix in 2025, while salty snacks, less affected by cocoa prices, maintained an 8% volume with a 1% price increase. Hershey's CEO, Kirk Tanner, and CFO, Steve Voskuil, have indicated that further price adjustments may be necessary in 2026 as cocoa prices remain
above historical levels despite recent declines.
Why It's Important?
The adjustments in Hershey's pricing strategy highlight the broader challenges faced by the confectionery industry due to volatile cocoa prices. As a major player, Hershey's actions could influence market dynamics and pricing strategies across the sector. The company's focus on maintaining growth through marketing, innovation, and R&D investments underscores the importance of balancing cost recovery with consumer demand. The potential for price deflation in confectionery, driven by lower cocoa costs, could impact profit margins and competitive positioning. Additionally, Hershey's approach to hedging cocoa prices and managing volume sensitivity reflects a strategic effort to navigate economic uncertainties and consumer financial strain.
What's Next?
Hershey plans to share more details about its strategic outlook at an event on March 31. The company has set a reported sales growth target of 4-5% for 2026, driven by net price realization and increased innovation. Organic sales growth is expected to be between 2.5% and 3.5%. Hershey's guidance for diluted EPS indicates a significant increase, suggesting a focus on financial recovery and growth. The company will continue to monitor cocoa price trends and adjust its hedging strategies accordingly, with an eye on potential deflationary opportunities in 2027.
