Hershey Widens Lead in Sweets Despite Competition From Private Label

As many food companies lose share to lower-priced competitors, Hershey candy is gaining ground.

The company shared in an Investor Day presentation Wednesday (March 22), in addition to reaffirming its guidance for the year, that it has gained share in confection while its competitors have been losing ground. Its candy brands have seen volume growth in North America even as consumers claim to be cutting back on unnecessary food purchases.

The brands are helped, as the company noted, by consumer trends such as spending more time at home (“+42B More At-Home Eating Occasions vs 2019,” per the presentation) and seeking comfort foods (“Chocolate is Top Snack for Stress Relief”).

Indeed, most consumers, at least in the U.S., work remotely, creating those opportunities for snacking at home. PYMNTS’ “12 Months of the Connected Economy” report, which drew from surveys of more than 33,000 U.S. consumers, found that, by the end of 2022, 58% of consumers worked remotely at least some of the time.

Yet, consumers claim that they are cutting back, not loading up, on extraneous grocery purchases. Additionally, many are trading down from brands to which they were previously loyal.

Findings from the January edition of PYMNTS’ Consumer Inflation Sentiment study “Consumer Inflation Sentiment: Perception Is Reality,” for which PYMNTS surveyed more than 2,100 consumers in December, revealed that 69% of consumers have made changes to their grocery shopping lists in the last year in response to rising prices. Fifty-nine percent have reduced the quantities of items they are purchasing, and 35% have reduced the quality.

Yet, it seems that, when it comes to items that are already well within most consumers’ budgets, such as chocolates, many grocery shoppers are willing to continue to spring for name brands.

“Chocolate and salty snacks rank as two of the top-three resilient treats that consumers are not willing to forgo,” Hershey Company CEO Michele Buck told analysts on an earnings call last month. “Chocolate moments are such a heavily integrated part of consumers’ weekly routines, from rewarding moments to stress relief to self-care, and everything in between, that they indicate they would rather cut back on other expenses to make room for chocolate because they love it so much and it’s affordable.”

Still, retailers are doing everything in their power to gain share from established brands, expanding, improving and/or refining their private-label portfolios in a bid to boost margins and secure shopper loyalty.

For instance, on its third-quarter earnings call earlier this month, Casey’s, the third-largest convenience store chain in the nation, said confectionery giants’ recent price increases have left an opening for private-label sales that was not there before.

“This is a great example of why private label is so important: we saw in the candy category that a lot of the national brands were passing on some impressive cost increases to all retailers, and it was starting to put some pressure on unit velocity,” Casey’s Chief Financial Officer Steve Bramlage said. “That gave us confidence to go into the candy bar category, which historically has been a really difficult category to penetrate because of the brand strength of the national manufacturers.”