Hershey Co. Gains Momentum: Strategic Positioning in a Consolidating Snacking Sector

The recent Goldman Sachs upgrade of Hershey Co. (NYSE: HSY) to a “buy” rating—from “sell”—marks a pivotal moment for the confectionery giant, reflecting both its operational resilience and strategic alignment with industry tailwinds. Analysts led by Leah Jordan raised the price target to $222, implying a potential 19% upside from its closing price on September 16, 2025Hershey gets a double upgrade from Goldman Sachs …^[1]. This move underscores a broader narrative: Hershey's ability to navigate a consolidating snacking sector while capitalizing on evolving consumer preferences.

Industry Tailwinds: Health, Innovation, and Consolidation

The global snacking sector is undergoing a transformation driven by three key forces: health-conscious consumption, flavor innovation, and market consolidation. In 2025, the U.S. snack industry reached $156 billion in sales, a 4.8% year-over-year increase2025 State of the Industry Report - SNAC Intl^[2]. Health-forward options, such as low-sodium and organic snacks, saw a 12% sales surge, while single-serve packaging grew by 10%, reflecting demand for portion control and convenience2025 State of the Industry Report - SNAC Intl^[2]. Meanwhile, bold flavors—spicy, global, and experimental—are reshaping product portfolios, with sriracha and harissa-inspired snacks gaining 15% popularity2025 State of the Industry Report - SNAC Intl^[2].

Consolidation is also intensifying. The proposed Mars-Kellanova mergerKraft Heinz splits, Mars-Kellanova merges, Ferrero …^[3], Kraft Heinz's splitKraft Heinz splits, Mars-Kellanova merges, Ferrero …^[3], and Ferrero's acquisition of KelloggKraft Heinz splits, Mars-Kellanova merges, Ferrero …^[3] highlight a sector where scale and agility are critical. Private-label brands are further fragmenting the market, particularly in categories like potato chips, where dollar sales grew by 5.4%2025 State of the Industry Report - SNAC Intl^[2]. Against this backdrop, Hershey's strategic investments in innovation and healthier options position it to outperform peers.

Hershey's Strategic Moves: From Confections to Snacking Powerhouse

Hershey's 2025 strategy is a masterclass in diversification and consumer-centricity. The company has aggressively expanded its better-for-you (BFY) portfolio, acquiring brands like Lily's (no-added sugar confections) and ONE™ Brands (high-protein bars). Its Fulfil protein line, including the 20g-protein BIGGEST Bar, aligns with the 12% growth in health-conscious snackingHershey unveils 2025 strategy: New products^[4]. Meanwhile, the acquisition of LesserEvil—a $23 billion organic snack maker—bolsters its presence in the plant-based segmentHershey unveils 2025 strategy: New products^[4].

Innovation extends beyond health. Hershey's Jolly Rancher line now includes Freeze Dried and Chewy Poppers, while Ice Breakers' Flavour Shifters gum redefines snacking experiencesHershey unveils 2025 strategy: New products^[4]. Packaging upgrades, such as stand-up bags for Bubble Yum, have improved product visibility by 41% compared to traditional formatsHershey unveils 2025 strategy: New products^[4]. These moves are not just incremental; they signal a shift toward convenience, indulgence, and differentiation.

The company's salty snack division is another growth engine. Acquiring Dot's Pretzels and LesserEvil has allowed Hershey to introduce bold flavors like Buffalo pretzels and Reese's filled pretzels, targeting a category expected to grow from 10% to 20% of total revenue within a decadeHershey unveils 2025 strategy: New products^[4]. This diversification mitigates reliance on traditional confections and taps into the $156 billion snacking sector's broader appeal.

Financial Resilience and Analyst Sentiment

Goldman Sachs' upgrade highlights Hershey's improved risk/reward profile, driven by cost pressures (e.g., cocoa prices, tariffs) now largely priced into expectationsHershey gets a double upgrade from Goldman Sachs …^[1]. The firm also cited market share gains in seasonal, sweets, and mints categories, supported by shelf space expansion and aggressive marketingHershey gets a double upgrade from Goldman Sachs …^[1]. Hershey's “gold standard planogram” strategy—aiming to boost adoption rates in convenience stores from 50% to 60% by year-end—further enhances sales visibilityHershey gets a double upgrade from Goldman Sachs …^[1].

Financially, Hershey projects minimum 2% net sales growth in 2025, with the Sour Strips acquisition contributing 30 basis pointsHershey unveils 2025 strategy: New products^[4]. Pricing initiatives and operational efficiencies are expected to drive outsized earnings growth in fiscal 2026, according to analystsHershey gets a double upgrade from Goldman Sachs …^[1]. While 17 of 24 analysts still rate the stock as a “hold,” the upgrade reflects growing confidence in Hershey's ability to navigate macroeconomic headwindsHershey gets a double upgrade from Goldman Sachs …^[1].

Conclusion: A Buy in a Fragmented Sector

Hershey's strategic positioning in a consolidating snacking sector is both timely and robust. By addressing health trends, embracing innovation, and leveraging acquisitions, the company is transforming from a confectionery brand into a diversified snacking powerhouse. The Goldman Sachs upgrade to “buy” at $222—implying a 19% upside—reflects not just short-term optimism but a long-term bet on Hershey's ability to capitalize on industry tailwinds. For investors, this represents a compelling opportunity in a sector where scale, agility, and consumer insight are paramount.