Is Hershey in trouble? Profits plummeting and ingredients under fire

Hershey future - summary

• Hershey faces profit declines and cost pressures entering challenging 2026
• Operating costs remain persistent risks despite strong sales and brand resilience
• Diversification into snacks supports stability but cannot fully offset chocolate volatility
• Leadership continuity under Tanner signals steady strategy without major directional shifts
• Future performance hinges on cost management, consumer demand, and market stability

The Hershey Company has faced a challenging start to 2026.

First came the news that profits had taken a massive 60% nosedive in 2025, with operating costs cited as the reason for the steep decline.

Now, it’s facing allegations of ingredient switching by the founding family of one of its biggest brands - Reese’s.

So, is Hershey in trouble, or is this merely a blip in its 132-year history?

Is Hershey in trouble?

The short answer to whether Hershey is in trouble or not, is no. Or at least, not yet!

Because yes profits, though significantly down on 2024, still sit at a healthy $320m (€270m).

Plus consolidated net sales for 2025 were up 7%, and organic, constant currency net sales were up by 5.7%.

But operating costs remain a significant problem, and it’s one that shows no sign of improving any time soon. And Hershey knows this.

“The company’s risk disclosures acknowledge that if it cannot offset rising raw material and energy costs, financial performance could be negatively impacted,” says Gauri Bagal, principal analyst for market insight firm, MarketsandMarkets.

And it can’t rely upon price increases to plug the gap, as consumer spending is increasingly focused on value for money.

“While pricing has helped mitigate cocoa inflation so far, it cannot fully insulate margins without affecting demand,” says Bagal. “Hershey likely still retains some pricing power due to brand strength, but the combination of volume pressure, discretionary spending pullback, and channel slowdown suggests it is operating closer to the upper boundary of what consumers are willing to absorb.”

In other words, if a competitor is cheaper they’re increasingly likely to make the sale.

Having said that, Erin Lash, CFA director of consumer equity research at financial services firm Morningstar, thinks the multinational has this under control.

“We expect Hershey to remain diligent,” she says. “Investing to ensure its mix keeps pace with evolving consumer trends, while also being mindful of consumers’ financial constraints, as 75% of its chocolate offerings are priced at less than $4.”

Opportunities

It’s not all bad news for the maker of Hershey Kisses, Twizzlers and Reece’s

The company made some strategically savvy moves in 2025, to help secure its future.

One of these was the acquisition of organic snack brand LesserEvil, in order to diversify its portfolio and appeal to the better-for-you snacking market.

And this isn’t the first time Hershey has taken a step into snacking. Like its competitors Mondelēz, Nestlé, Ferrero, and Mars, it’s embracing the opportunities the fast-growing snacking sector offers.

“Snacks are delivering strong growth and helping improve margins,” explains MarketsandMarkets’ Bagal. “The expansion into snacks and lower cocoa-dependent categories is an important step towards diversifying the business and reducing risk.”

Though she cautions that “given the current scale difference between confectionery and snacks, this strategy is more likely to help stabilise earnings and support growth rather than fully offset potential pressures in the chocolate segment.”

Under new management

Kirk Tanner took on the role of Hershey CEO halfway through 2025 – succeeding industry powerhouse, Michele Buck.

And, while he certainly has big shoes to fill, initial reaction to the appointment has been positive... or at the very least, not negative.

As MarketsandMarkets’ Bagal explains, it “introduces limited strategic uncertainty and reflects leadership continuity rather than a directional shift”.

Hershey’s “Leading Snacking Powerhouse strategy remains unchanged”, explains Bagal, and there’s been no indication of a reset in portfolio priorities, capital allocation, or long-term growth ambitions. “The overall shift appears evolutionary rather than transformative.”

Hershey’s outlook

Tanner’s assessment of Hershey’s future was surprisingly upbeat during the recent earnings report announcement, with the new CEO saying the company was “building the capabilities and brand investments” that position it for “continued success”.

Analysts, meanwhile, are a little more cautious.

“The 2026 outlook looks slightly optimistic, but still realistic,” says Bagal.

Management, she explains, believes demand for chocolate and snacks to remain solid, and margins to improve as the business manages costs more effectively. “This suggests the company is aiming high, but not in an unrealistic way.”

However, there are still risks. Cocoa prices remain volatile, and consumers may cut back on spending if economic conditions weaken.

In other words, it’s “achievable if market conditions remain stable and execution is strong”.

What next for Hershey?

So, where does all this leave Hershey?

The company’s fundamentals remain strong – Hershey’s still profitable, still growing sales, and still home to some of the most powerful brands in global confectionery.

But the forces pressing on the business – volatile cocoa markets, persistent cost inflation, and consumers who are increasingly scrutinising both value and ingredients – aren’t going anywhere.

The good news for Hershey is that the building blocks for a more resilient future are already being laid. It’s stepped‑up investment in snacking, reduced reliance on cocoa‑heavy categories, and strategic additions like LesserEvil signal a recognition that long-term growth will depend on diversification.

Under Tanner’s leadership, the company seems intent on strengthening capabilities rather than radically reinventing itself – evolution, not disruption.

Over the coming year, Hershey’s success will hinge on three things – how effectively it manages cost pressures, how convincingly it can retain value‑seeking shoppers without overreaching on price, and how well it can expand into categories that offer higher margins and lower volatility.