Hershey (NYSE:HSY) said it continues to expect 2027 sales growth within its long-term 2% to 4% range, though executives cautioned that consumer pressure and a weaker convenience-store channel could determine whether results land toward the lower end of that outlook.
During the company’s third-quarter 2026 earnings Q&A session, President and CEO Kirk Tanner said Hershey is relying on media, innovation, event-based programming and revenue-growth-management strategies to support demand. The company expects low-single-digit carryover pricing in 2027, while its innovation pipeline is projected to be 50% larger than in 2026.
“We’re confident in the actions we control and the results that are already delivering,” Tanner said. However, he added that higher gas prices, overall inflation and consumer spending pressures remain outside the company’s control.
Innovation and brand investment central to growth plans
Tanner said Hershey’s recent advertising investments have generated improved returns, with the Hershey’s brand growing 7% over the past 13 weeks. The company has introduced three new advertising campaigns and plans to continue investing in media, research and development, merchandising and innovation.
Among recent product launches, Tanner cited Hershey’s Creme Bars as the top innovation in the category over the past four weeks, while Reese’s Oreo was the largest innovation over the prior 52 weeks. Additional fourth-quarter launches include Hershey Rolls, an Ice Breakers stick-gum offering at an opening price point, Hershey Truffles and Caramels, KIT KAT seasonal shapes, Dot’s Buffalo Snack Mix, Reese’s cocoa-filled pretzels and SKINNYPOP Parmesan Garlic.
The company expects some of its largest 2027 product launches to arrive early in the year. Tanner said the pipeline includes products targeting premium, sweets, permissible salty and functional categories. He said innovation is expected to contribute three times more to growth in 2027 than it did in 2026.
Hershey also plans to maintain brand investment at approximately 10% for the full year, according to CFO Dave Hulays. New campaigns supporting Cadbury, Fulfil and Payday are currently ramping, he said. Hulays added that the company has seen an 8% improvement in return on investment from marketing as it uses a more real-time marketing mix model to direct spending.
Volumes show signs of improvement, though comparisons remain difficult
Executives acknowledged continued market-share pressure and difficult comparisons tied to last year’s Reese’s Oreo launch. Hulays said share performance accelerated during July and August before encountering tougher September comparisons, a dynamic expected to continue through the rest of 2026.
Still, management said unit and volume trends are improving as price growth moderates. Hulays noted that pricing is moving from high-teens levels in the third quarter to single-digit pricing in the fourth quarter. Tanner said Hershey is seeing meaningful improvement in unit trends for brands including Hershey’s, KIT KAT, Cadbury and Kisses.
“It’s our job to stimulate demand here,” Tanner said, adding that the company expects continued improvement through the fourth quarter and into the first half of 2027, though the progression may not be linear.
Management said it does not view broad price reductions as the appropriate response to consumer pressure. Instead, Hershey is emphasizing pack-and-price architecture, targeted promotions and value-focused offerings, particularly in convenience stores. Tanner characterized confectionery pricing as rational and said category growth has historically been driven more by innovation than promotional activity.
Convenience stores remain a notable pressure point
Hershey said convenience-store performance has been the most significant channel weakness. The category declined 5% in convenience stores during September, and management said that softness continued into October. By comparison, the company said its business outside convenience stores grew 3.7% during the third quarter.
Hulays said consumers are becoming more deliberate in their purchases amid inflation, gasoline prices and interest rates, with spending shifting toward mass, e-commerce and club channels. Management described the trend as more of a channel and trip issue than a broad category issue.
For Halloween, Tanner said the timing of the holiday on a Saturday has compressed the selling period, with about 35% of seasonal sales expected during the final week. Hershey’s share was up in most classes of trade, he said, and the company has increased shipments and displays versus the prior year. Participation intent is in line with last year, but Tanner said the final selling days remain important.
Margin recovery depends on cocoa, productivity and logistics
Hulays said Hershey expects meaningful margin improvement in 2027, with the timing of cocoa hedges representing a major difference between fourth-quarter 2026 margins and next year’s outlook. The company continues to target mid-40% margin recovery over the long term, an ambition Hulays said extends into 2028 and beyond.
Management cited factory digitization and automation, decision-intelligence tools and logistics optimization as major productivity opportunities. The company is also pursuing manufacturing efficiencies, waste reduction, working-capital improvements, freight-lane optimization and customer-order management improvements.
On cocoa, Hulays said the company is coming off a historical global surplus of 500,000 to 600,000 metric tons, with healthier inventories, rising acreage and increasing production from new origins. He pointed to Ecuador’s record export output in September and said Hershey does not expect cocoa prices to remain at current levels over the long term. The company is using flexible hedging structures and sourcing options, including a new chocolate-paste facility that can enable more direct origin sourcing when appropriate.
Hershey also expects its salty-snacks business to become a larger contributor to sales and profit in 2027. Tanner said demand currently exceeds supply, but service levels are improving and new manufacturing lines are scheduled to come online in the first half of 2027. Investments in automation are intended to help meet demand for single-serve and multipack formats.
Looking ahead, Hulays said Hershey’s original 2027 earnings-per-share framework is not “completely off the table,” but would require improvements in freight and logistics costs, commodity costs, productivity returns and consumer demand. If current conditions persist, he said earnings could fall short of the company’s original framework, even as Hershey continues investing for long-term growth.
About Hershey (NYSE:HSY)
The Hershey Company (NYSE: HSY) is a global confectionery and snack food manufacturer headquartered in Hershey, Pennsylvania. Founded by Milton S. Hershey in 1894, the company began as a chocolate producer and has grown into one of the largest branded snack businesses in North America.
Hershey’s portfolio includes chocolate, non-chocolate confectionery, gum and mints, and salty snacks. Its brands include Hershey’s, Reese’s, Hershey’s Kisses, Kit Kat in the United States under license from Nestlé, Jolly Rancher, Twizzlers, Ice Breakers, SkinnyPop and Dot’s Pretzels.
