Hershey (NYSE:HSY) executives used the company’s fourth-quarter 2025 earnings Q&A to emphasize what they described as strengthening momentum across the portfolio while navigating “serious headwinds” including cocoa inflation and macro volatility. President and CEO Kirk Tanner said the company enters 2026 expecting 4% to 5% net sales growth and “meaningful earnings recovery,” while continuing to invest in innovation, brand building, and execution.
Pricing, cocoa, and the risk of deflation
Several analysts focused on the sharp move lower in cocoa and whether that could pressure pricing. Tanner said Hershey and competitors are “sophisticated” and likely have coverage to bring certainty to their businesses, while private label remains small in the U.S. He added that the company does not take pricing lightly and has been “very patient” to balance consumer needs, noting that 75% of Hershey’s portfolio remains under $4.
On hedging and the outlook for cocoa costs, Voskuil said Hershey is “glad to see” financial markets beginning to reflect fundamentals the company has described for the last 18 months, including expectations for a larger supply surplus in 2025 and 2026 driven by supply expansion and some contraction in global demand. However, he said the company still believes a new equilibrium in cocoa is likely above historic levels.
Voskuil said Hershey’s hedging is “not in great shape for 2026,” with the company hedged above current market levels. He also told analysts that cocoa costs in 2026 are up “just a little” versus 2025 and that some flexible hedging structures allow Hershey to participate in some downside, though less than last year. Looking further out, he said if current market levels held flat, that could suggest “upside for further deflation in 2027,” though management did not provide specifics on 2027 hedging.
Elasticities and the company’s planning assumptions
Management said it has been encouraged by early elasticity trends following pricing that was announced in July and began rolling in mid-September. Voskuil cautioned that elasticities fluctuate and said the company continues to plan around approximately 0.8, in part because some price-pack changes and shelf-tag updates are still rolling through channels. He added that the company’s goal is to do better than that assumption, supported by its activation calendar and planned investments.
When asked about how much volume pressure the company is willing to absorb, Voskuil said the volume impact of pricing is embedded in 2026 guidance. He said the company has agility within the plan—across marketing, promotions, and other investments—to respond if it sees areas of concern, though he added that the competitive environment has been rational and stable and current elasticities are “as expected, if not a little better.”
2026 guidance drivers, gross margin cadence, and Q4 upside
Analysts asked management to reconcile changes in expectations amid shifts in cocoa, tariffs, and elasticities. Tanner pointed to improved momentum “across the portfolio,” citing continued strength in the company’s core confection business and “tailwinds” in the salty portfolio. He highlighted that the salty business posted 18% growth in Q4 with double-digit volume growth.
Voskuil said Hershey is in a “good spot” to have cocoa and tariff risks “fully understood” for the year “up to the moment.” He added that the company has improved visibility into elasticities, strong operating plans, and a balanced view of macro headwinds and potential competitive response. He also described controllables management believes it can outperform—such as elasticities, innovation, media, in-store activation, and productivity—while acknowledging macro and competitive factors are less controllable.
On fourth-quarter performance, Voskuil said gross margin came in a few hundred basis points better than expected, driven by strong volumes and leverage, but said the single biggest upside was tariffs. He explained that Hershey had anticipated paying more tariffs on certain suppliers’ materials than it ultimately paid in the quarter. That benefit was partially offset by LIFO and inventory revaluation headwinds. He also noted that some tariff impact remains in inventory and is expected to flow out in the first quarter.
Regarding 2026 quarterly cadence, Voskuil said the company expects Q1 to be strongest on the top line as it carries momentum from Q4, but that margin and earnings will remain under pressure in Q1 due to higher-cost inventory and tariffs embedded in inventory. He said management expects a gross margin inflection in Q2 and anticipates double-digit EPS growth for the balance of the year from that point, while noting tougher comparisons in the second half are factored into plans.
Investment priorities: advertising, innovation, and “cultural moments”
Management repeatedly returned to increased investment in 2026. Tanner said the company is planning a major campaign for Hershey and Reese’s, calling 2026 “the year of Hershey.” He described the “Your Happy Place” campaign and said the company has a full year planned for both brands, including innovation and “big innovation coming out on Hershey.” He also referenced a movie celebrating Milton Hershey and the company’s story coming in the fall.
Responding to questions about the durability of spending, management said some 2026 initiatives are multi-year investments intended to lay a foundation for 2027 and beyond while still driving growth in the near term. Voskuil said the company expects brand investment to be up double digits across the quarters. Tanner added that the company will detail these plans at an investor conference on March 31 in New York.
Tanner also discussed an effort to connect brands with more cultural and seasonal events beyond traditional seasons, describing an “almost always-on approach.” He cited the Olympics as the first of these tentpoles, followed by the NCAA Final Four and summer events tied to the country’s 250-year anniversary.
Salty snacks momentum, international outlook, and macro watch items
On salty snacks, Tanner said customers reward shelf space based on performance and velocity and argued Hershey’s salty growth has been providing incremental growth to a category that was “relatively flat” last year. He said the company expects continued space gains, including support for innovation.
In response to questions about international trends, Voskuil provided segment organic sales expectations for 2026 as discussed on the call: confection around 3%, salty snacks mid-single digits, and international down low single digits. He also said the company expects double-digit year-over-year EBIT improvement across segments. On international specifically, he said Hershey has taken significant price, which has impacted volumes, and that the company is focusing on markets where it has the best chance to win while optimizing its go-to-market and investing behind Reese’s and core markets. Tanner said he is “bullish” on international opportunities and cited share gains in Canada, Mexico, Brazil, and the U.K.
Management also addressed macro factors including SNAP program changes and GLP-1 adoption. On SNAP, Tanner said early assessments in states with waivers are “pretty noisy,” influenced by differences in retailer implementation and winter storms. He said the company has factored SNAP waiver adoption into its outlook and called it a “manageable headwind,” noting that only two states had implemented candy-related waivers so far out of 12 approved.
Finally, Tanner and Voskuil highlighted interest in functional snacking, including protein. Tanner said the company has invested in R&D around protein and fiber and “really like[s] what we’re building with ONE and FULFIL,” adding that Hershey is open both to organic growth and potential portfolio-building opportunities in the future.
About Hershey (NYSE:HSY)
The Hershey Company (NYSE: HSY) is a leading North American chocolatier and snack manufacturer headquartered in Hershey, Pennsylvania. The company develops, produces and markets a wide range of confectionery and snack products for retail, foodservice and international customers. Hershey’s business spans manufacturing, branded product marketing, packaging and distribution across grocery, convenience, mass merchant and e-commerce channels.
Hershey’s product portfolio centers on chocolate and sugar confectionery, including core brands such as Hershey’s, Reese’s, Hershey’s Kisses and Twizzlers, alongside non-chocolate snacks and confectionery brands.
