Hershey anticipates “lower sensitivity” on volumes from pricing across its portfolio even as the confectionery and snacks giant recovers cocoa inflation.
The Reese’s chocolate maker has embedded ten percentage points of pricing into its group sales revenue guidance for the 2026 fiscal year, above last year’s six-point increase that took volume/mix down 1%.
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Volume/mix declines in confectionery were sharper in 2025 at 2% based on the same level of pricing, while volumes in salty snacks, which are not subject to cocoa fluctuations, held up at 8% with lower price of 1%.
As president and CEO Kirk Tanner fielded questions from analysts yesterday (5 February) post the release of its annual results, the direction of cocoa and the impact on Hershey’s price strategy was a key topic.
Like Mondelez earlier in the week, Tanner and his finance counterpart Steve Voskuil said pricing was not fully recovered last year from cocoa inflation, implying further price moves in 2026.
Both Hershey and Mondelez had locked in cocoa rates through hedging before this year’s sharp decline in the commodity, although futures remain above historical levels following the record high in late 2024.
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By GlobalDataExpectations are now surfacing for price deflation in confectionery to reflect the lower cocoa costs but executives are coy on that prospect.
Tanner said: “Our competitors in the category are sophisticated, and they’re large like ourselves, and they likely have coverage for more certainty in their business. Private label remains small here in the US, so that’s the first point. But there’s a big conversation around how we think about pricing and the price of cocoa.”
The CEO added: “The pricing we took in ’25 – I think this is important – does not fully cover our cocoa cost inflation in 2026. So we are on a recovery path while also adding significant fuel to our growth with investments in marketing, innovation, R&D, really to keep that momentum on the top line going, and keeping the category exciting for consumers and keep that growth moving into ’26, or beyond ’26, into ’27 and ’28.
“Certainly, the deflationary momentum on cocoa takes future pricing pressure down.”
Voskuil was more nuanced in his responses as the CFO suggested cocoa has not yet found its “new equilibrium”, which is likely to settle above historical rates going forward.
“We’re hedged above current market levels. So if you extend current market levels flat, that would suggest that we still have some upside for further deflation in 2027,” he explained.
“We’ve got a variety of hedging structures, and some of those structures allow us to participate in downside. So even in ’26, we have a little opportunity. And then, of course, as we look to ’27, placing hedges today would mean that we’d have deflation between ’27 and ’26, so we’re watching that space.”
Ahead of sharing more on Hershey’s plans at an event on 31 March, the outlook for reported sales has been set at 4-5% (+4.4% in 2025) “driven by net price realisation and increased innovation, cultural and seasonal activations, and advertising levels to support demand”.
Organic sales growth is anticipated at 2.5% to 3.5% versus 4.2% last year.
The guidance for reported EPS on a diluted basis is $7.77 to $8.19, or an increase of 79% to 89% versus 2025, when the metric fell 60.3%.
In adjusted terms, diluted EPS is expected at $8.20 to $8.52, up 30% to 35%. It dropped 32.7% last year.
“We now expect slightly lower volume sensitivity to pricing actions than previously planned,” Voskuil said:
“Our 2026 outlook also incorporates prudent assumptions for potential demand headwinds, including accelerated health-and-wellness trends and increasing GLP-1 adoption, government policy changes, and ongoing consumer financial strain.”
