Hershey: Price Increases Won’t Keep Up With Historically High Cocoa Costs

Hershey expects the surge in cocoa prices to continue to outpace the company’s price increases on its chocolate products.

As a result, the company expects to see its adjusted gross profit margin contract this year, Hershey Senior Vice President and Chief Financial Officer Steve Voskuil said Thursday (Feb. 6) in prepared remarks for the company’s quarterly earnings call.

“Historically high cocoa prices, sugar and other raw material inflation, along with incremental labor inflation, new tariffs and negative product mix are expected to more than offset net price realization, supply chain productivity and incremental savings from our transformation program,” Voskuil said.

During 2025, the company expects net price realization to drive next sales growth of at least 2%, according to a Thursday earnings release.

To deal with the price of cocoa, Hershey is using sourcing and hedging strategies and researching ways to save costs without compromising on the products’ quality and taste, Hershey CEO and Chairman Michele Buck said in the prepared remarks.

Hershey is also monitoring the impact of GLP-1s — the appetite-suppressing medications like the diabetes drug Ozempic — and Americans’ interest in health and wellness on its products, which include not only chocolate but also snacking and confection products like Twizzlers, Jolly Rancher, Dot’s Pretzels and SkinnyPop Popcorn.

Asked by an analyst about the effect of GLP-1s, Buck said during the Q&A portion of the earnings call that the company has seen no material impact.

“We have multiple data sources that support our view that users of the drugs do not eat disproportionately less of our categories,” Buck said.

Buck added that the company knows there is “a broader shift in consumer preference for healthier items that has been underway for some time” and that it will “continue to evolve our portfolio as we continue to track what’s important to consumers.”

Addressing consumer’s interest in health and wellness, Buck said the company hasn’t seen a “massive change.”

“Certainly, we’re seeing really nice growth on our zero-sugar line of products and also our protein line of products, both of which we put a heightened focus on growing,” Buck said. “And we see a lot of opportunity on those going forward.”

The company has consistently done well during seasons like Easter and expects to continue to do so this year, Buck said.

“I think there’s a very strong emotional component with consumers that makes them want to participate in seasons regardless of what may be going on in the macro environment,” Buck said. “They love their brands that have been part of their traditions and rituals over the years with their families.”