Hershey’s recently reported second-quarter earnings revealing a notable trend: consumers are favoring savory snacks over chocolate, impacting the company’s financial expectations for the year and prompting a revised outlook, the first in seven years.
Despite this shift, Hershey’s shares saw a slight increase in early trading hours. Michele Buck, CEO of Hershey’s, acknowledged the dynamic consumer environment, attributing the company’s adjusted forecast to reduced discretionary spending among consumers. She noted, however, that the confection category continues to grow, with Hershey’s seeing momentum in its Salty Snacks portfolio.
The rise in cocoa prices, driven by poor crop conditions in key cocoa-producing regions like western and central Africa, has also impacted Hershey’s profit margins. Steven E. Voskuil, Chief Financial Officer, highlighted that elevated cocoa costs coupled with sugar inflation are expected to outweigh gains from pricing and supply chain efficiencies.
While consumer spending shifts towards home goods and kitchen essentials, confectionery sales in North America dropped by 21% year-over-year, partly due to planned inventory reductions aligning with decreased demand. In contrast, U.S. sales of salty snacks increased by 6.4%, driven by popular choices like SkinnyPop popcorn and Dot’s Homestyle Pretzels, including a new parmesan garlic variety. Internationally, sales declined by 8.9% compared to the previous year.
Looking ahead, Buck expressed confidence in Hershey’s ability to adapt to evolving consumer preferences, affirming the company’s readiness to navigate these challenges while focusing on sustainable growth and profitability in the long term.
For more details, visit Hershey’s official website or financial reports for comprehensive insights into their strategic adjustments and market performance.