The call was overwhelmingly positive, centered on the consumer-facing impact of the cocoa price cycle. Hershey expects strong sales and earnings recovery in 2026, driven by strong brand momentum and innovation, while managing hedged, high cocoa costs that will only begin to ease in 2027. Hershey expects 2026 net sales growth of 4-5% and EPS growth of 30-35%, signaling a strong margin recovery.
Buzzberg readHershey expects 4-5% net sales growth in 2026The call was overwhelmingly positive, centered on the consumer-facing impact of the cocoa price cycle. Hershey expects strong sales and earnings recovery in 2026, driven by strong brand momentum and innovation, while managing hedged, high cocoa costs that will only begin to ease in 2027. Hershey expects 2026 net sales growth of 4-5% and EPS growth of 30-35%, signaling a strong margin recovery.Read full analysisCollapse analysis
The call was overwhelmingly positive, centered on the consumer-facing impact of the cocoa price cycle. Hershey expects strong sales and earnings recovery in 2026, driven by strong brand momentum and innovation, while managing hedged, high cocoa costs that will only begin to ease in 2027. Hershey expects 2026 net sales growth of 4-5% and EPS growth of 30-35%, signaling a strong margin recovery.
Cocoa cost deflation is a 2027 event, not a 2026 one, as Hershey is hedged at higher prices for 2026.
Salty snacks is a major growth engine, with HSY growing 18% and taking share in a flat category, and expects outsized performance in 2026.
Management sees SNAP waiver implementation as a manageable headwind, providing confidence in volume resilience.
SALTY_SNACKS rev growth18%
reported
Revenue$3.091B
reported
EPS$1.71
reported
Gross margin37.04%
reported
What changed this quarter
01
Guidance
Hershey expects 4-5% net sales growth in 2026
Guidance · revenue to 4.5%
02
Cocoa
Management sees cocoa deflation as tailwind for 2027
Hershey expects 2026 net sales growth of 4-5% and EPS growth of 30-35%, signaling a strong margin recovery.
03
Pricing
Pricing taken does not fully cover 2026 cocoa cost inflation
Cocoa cost deflation is a 2027 event, not a 2026 one, as Hershey is hedged at higher prices for 2026.
04
Demand
Salty snacks business grew 18% in Q4 with double-digit volume
Management expressed confidence in 2026 guidance, highlighted momentum across the portfolio, and emphasized execution capabilities and investment plans.
Demand & capex
Demand
Bookings & conversion
Salty snacks business grew 18% in Q4 with double-digit volume. Management expressed confidence in 2026 guidance, highlighted momentum across the portfolio, and emphasized execution capabilities and investment plans.
Capex
Investment and capacity
Capex is normalizing back into the space where it should be, with a focus on funding the organic business and maintaining agility for inorganic opportunities.
Tone · Confident
Management expressed confidence in 2026 guidance, highlighted momentum across the portfolio, and emphasized execution capabilities and investment plans.
Supply-chain alpha
A1
Cocoa prices have dropped sharply, but Hershey is hedged well above current spot levels for 2026, meaning they will see cost deflation only in 2027. They expect cocoa supply surplus to continue in 2025/26.
“we're hedged above current market levels. So, you know, if you kind of extend current market levels flat, that could potentially imply that we still have some upside for further deflation in 2027”
The company's pricing actions for 2026 don't fully cover the cocoa cost inflation for 2026, and they are taking a strategic and patient approach to pricing to preserve affordability, with 75% of portfolio under $4.
“the pricing we took in 25, I think this is important, does not fully cover our cocoa cost inflation in 2026. So we're on a recovery path while also adding significant fuel to our growth”
Salty snacks category was flat last year, but Hershey grew it by double-digits with 18% growth and double-digit volumes in Q4, suggesting they are taking meaningful market share in the snacks aisle.
“If you think about the category, the Salty category was relatively flat last year, and we grew double digits. So we provided a lot of growth in the category”
Company sees SNAP benefit waiver implementation as a manageable headwind, which is a positive signal about near-term volume resilience. Only 2 of 12 states have implemented waivers so far.
“To date, only two states have implemented SNAP waivers for candy of the 12 states that have waivers approved... it's a manageable headwind and it's contemplated in our outlook.”
Pricing has been fully sold in, no further price increases are planned for 2026, and the market remains rational. This takes away a major risk variable for the cadence of business over the year.
“All the pricing has been sold in, so that's not a risk. There's nothing else pricing-wise that's going to drop.”
The company's pricing actions for 2026 don't fully cover the cocoa cost inflation for 2026, and they are taking a strategic and patient approach to pricing to preserve affordability, with 75% of portfolio under $4. — Indicates continued margin pressure for the entire chocolate category, but suggests Hershey's is prioritizing volume growth over margin recovery, a choice that puts pressure on premiumized competitors.
Great. Thanks so much. Good morning, everybody. Good morning. Good morning, Andrew. Hi. Maybe to start, I appreciate, obviously, that the topic category is typically not one that is a pass-through category and that Hershey and others are are still hedged well above where current spot rates are for cocoa at this point. But I guess just given the precipitous recent decline in the commodity, I guess, is there a risk maybe this time around that we could see some price deflation at some point by either Hershey or competitors to sort of better match, you know, go forward cocoa costs? And I guess, how do you account for that sort of possibility in the guidance?
Yeah, thank you for the question. Our competitors in the category are sophisticated and large, like ourselves, and they likely have coverage for more certainty in their business. And private label remains small here in the U.S., so that's kind of the first point. But there's a big conversation around how we think about pricing and the price of cocoa, et cetera. I'd like to make a few points here. So first, we don't take pricing lightly, and we've been very patient and played the long game when cocoa markets surge to balance consumer needs. Our actions that we've taken are anchored in consumer insights, and the brands remain affordable and accessible. Seventy-five percent of our portfolio is still under $4. The pricing we took in 25, I think this is important, does not fully cover our cocoa cost inflation in 2026. So we're 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 beyond 26 into 27, 28. And then recently, pricing on our snacks business, I think we're in really good shape. We had 18% growth on our snack business in Q4 on double-digit volume growth. Let me get a drink. Sorry, Andrew. No, no, take your time, take your time. Yeah, so that's kind of a broad response to what we see in the market. Certainly the deflationary momentum on cocoa takes future pricing pressure down. That's how I think about it.
Salty snacks category was flat last year, but Hershey grew it by double-digits with 18% growth and double-digit volumes in Q4, suggesting they are taking meaningful market share in the snacks aisle. — Signals that Hershey's is out-executing in salty snacks, a category where they are a challenger, and over-indexing to velocity and distribution gains at the expense of other players like PepsiCo and Kraft Heinz.
And then maybe just a follow-up on Salty. There was a competitor this week that talked about affordability, price reductions, that they're seeing expanded shelf space distribution. I know there's some subcategory differences, but just curious how you see that playing out for the category and maybe any implications for your business as well.
Yeah, our Salty business has got a lot of momentum, like we talked about, 18%, double-digit growth for the full year and really healthy volume growth. Customers reward space on performance and velocity. That's the fundamentals of category management. And so we are, as well, we're expanding with our customers, and customers need our growth. If you think about the category, the Salty category was relatively flat last year, and we grew double digits. So we provided a lot of growth in the category, and we'll continue to do that with our customers, and we'll be rewarded with space gains and additions, including... you know, support for the innovation that we bring out on our salty business. So I feel really good about the fundamentals of where we are with our salty business and that momentum will continue.
Cocoa prices have dropped sharply, but Hershey is hedged well above current spot levels for 2026, meaning they will see cost deflation only in 2027. They expect cocoa supply surplus to continue in 2025/26.
Company sees SNAP benefit waiver implementation as a manageable headwind, which is a positive signal about near-term volume resilience. Only 2 of 12 states have implemented waivers so far.