HERSHEY, PA. — Like many other companies that manufacture chocolate products, The Hershey Co. is preparing for record high cocoa prices in 2025, and strategizing how to mitigate the impact of commodity volatility on its business.

“This is a transformational time for Hershey,” said Michele Buck, chief executive officer and chairman of Hershey. “We expect the surge in cocoa prices to continue to put significant pressure on earnings in 2025. While we continue to view today’s high cocoa prices as transient, our teams are readying opportunities for quick execution, and we are prepared to adjust our pricing, price pack architecture, formulations, demand shaping, and investment strategies, should our view on the commodity markets evolve.

“We continue to advance our sourcing and hedging strategies, including origin and supply chain diversification, while investing in our cocoa science program. The strength of our R&D team gives us a greater opportunity to leverage all potential sources of cost savings without compromising on the high quality and great taste of our products that consumers love.”

Steve Voskuil, senior vice president and chief financial officer, added, “We have very good visibility into our cost basket, including cocoa, albeit at significantly higher pricing levels than prior years. Our coverage caps our risk while allowing us to participate if the cocoa market falls.

“We have no concerns about the global physical supply of cocoa. Fundamentals continue to improve with cocoa arrivals in Ivory Coast and Ghana ports up approximately 30% compared to this time last year. Rest-of-world production — which is nearly half of the global supply — is pacing at 10% growth versus the prior year. We have largely secured our butter, liquor, and powder needs for the year.”

Voskuil said Hershey’s adjusted gross profit margin for 2025 is expected to contract by approximately 650 to 700 basis points due to historically high cocoa prices, sugar and other raw material inflation, along with incremental labor inflation and potential tariffs. Hershey said net sales growth for 2025 is expected to be at least 2%, while reported earnings per share are projected to be down in the high-40% range, and adjusted earnings per share are forecast to be down in the mid-30% range. The company estimates this to be between $5.54 and $5.86 per share.

Finishing strong

While the company plans for 2025, it ended the previous year on a high note. Hershey’s fourth-quarter sales were strong, led by its North America Confectionery and North America Salty Snacks segments.

Hershey’s overall net sales for the fourth quarter ended Dec. 31 were $2.88 billion, an increase of 8.7% compared with the same period last year, while net income was $796.6 million, equal to $3.92 per share on the common stock, an increase of 131% versus the year prior. Adjusted earnings per share was $2.69, an increase of 33% from the prior year.   

Fourth-quarter net sales for Confectionery — which encompasses candy, mint and gum, and includes brands like Reese’s, Jolly Rancher, KitKat, and the recently acquired Sour Strips — was $2.35 billion, an increase of 6% compared with the same period last year. Confectionery segment income for the fourth quarter was $808.2 million, 11.5% higher compared with last year.  

Buck noted during the company’s earnings call that Halloween and holiday retail sales growth added 40 basis points to the quarter’s overall numbers. Specific products also sold well at the retail level, including Reese’s Caramel and Lava Big Cup, Shaq-a-licious XL Gummies, and Jolly Rancher items. Buck said 8.2% of that sales growth came from club, dollar, and e-commerce outlets.  

Photo: ©SHEILAF2002 – STOCK.ADOBE.COM

Fourth-quarter net sales for Salty Snacks — which includes brands like SkinnyPop popcorn, Pirate’s Booty, and Dot’s Pretzels — were $278.9 million, an increase of 36% year over year. Salty Snacks’ fourth-quarter segment income was $54.5 million, an increase of 424% compared to same period last year.   

Voskuil said the 36% increase in sales reflected “an approximate 21-point tailwind from lapping the planned inventory drawdown following the (fourth quarter) 2023 ERP implementation, as well as the expected benefits from order timing shifts from Q3 into Q4 following our route-to-market changes, as well as two extra shipping days.”

Buck said retail sales for North America Salty Snacks increased 7.1% in the fourth quarter, with SkinnyPop sales rising 4.7%, and Dot’s Pretzels increasing sales by 21%, “driven by household penetration gains, strong repeat rates, and flavor and pack-type innovation.” 

Full-year 2024 results for Hershey included $11.2 billion net sales — an increase of 0.3% year over year — while net income was $2.22 billion, or $10.92 per share, an increase of 21% compared with last year. Adjusted earnings per share was $9.37, a decrease of 2.3% versus 2023.

Monitoring GLP-1

During the earnings call, one analyst asked Buck how the company was monitoring GLP-1 data in relation to consumer buying trends — particularly for snacks and sweets — since Hershey mentioned in its third-quarter 2024 earnings call that the prospect of GLP-1 weight-loss drugs was having a “mild impact” on the company. 

“We have triangulated both external and internal evidence, including some of the most recent studies, like the Cornell and Numerator study, and they tend to validate our internal views,” Buck said. “We have multiple data sources that also support our view that users of the drugs do not eat disproportionately less of our (product) categories. We do know there’s a broader shift in consumer preference for healthier items that has been underway for some time — items that have nutritional claims around low sugar and other things. And we will continue to evolve our portfolio as we continue to track what’s important to consumers.”

Search for Buck’s successor

Last month, Buck announced she was retiring from Hershey in June 2026, and mentioned during the earnings call that she’s “working closely with the board to ensure the right selection (of a successor) and a seamless transition.”

“I am absolutely 100% laser-focused in the interim on delivering our 2025 plans, continuing to execute our transformation, and making sure I’m positioning the company for our next phase of growth,” Buck said.