Hershey's Q2 2025: Navigating Contradictions on Tariffs, Cocoa Prices, and Sustainable Growth

Tariff mitigation strategies, sustainable growth in sweets, impact of SNAP restrictions, cocoa price and pricing strategy, and cocoa supply and tariffs are the key contradictions discussed in The Hershey Company's latest 2025Q2 earnings call.



Pricing Strategy and Margin Recovery:
- Hershey has announced a significant price increase to address ongoing cocoa inflation, with an assumption of 1:1 elasticity on new pricing.
- The strategic move seeks to recover margins and offset costs by capturing higher pricing without significant volume loss.

Chocolate Category Performance:
- The everyday chocolate category saw growth of 6.7%, with Hershey's nonseasonal brands experiencing mid-single-digit growth in the quarter.
- Growth was driven by consumer interest in innovation, emotional well-being, and strategic partnership initiatives that expanded distribution and shelf space.

Salty Snacks Segment Strength:
- The salty snacks segment, including brands like SkinnyPop and Dot's, performed above category trends despite broader challenges in the sector.
- Strong consumer acceptance and marketing efforts, such as new packaging and exclusive flavors, contributed to this success.

Cocoa Tariff Exemption Discussions:
- Hershey has been actively engaging with government officials to discuss potential cocoa tariff exemptions.
- Optimism has increased due to public statements acknowledging the specific challenges cocoa presents, suggesting a thaw in government stance.

Innovation and Product Investment:
- The company has stepped up its innovation efforts, with significant increases in innovation as a percentage of net sales compared to 2019.
- This focus is aimed at capturing consumer interest and addressing competition from insurgent brands and private label offerings.