As a strong seasonal seller, Hershey’s sales historically have climbed and crested alongside key holidays, but the sweets and snacks maker is adopting an innovation strategy that leverages cultural moments in between conventional candy occasions and leans into functional snacking to drive higher sustainable sales year around.
The strategic shift comes at a time when sweets and snacks sales are under pressure from restrictions limiting SNAP spending, the adoption of GLP-1 medications to manage weight and ongoing inflation that discourages discretionary spending.
But rather than leaning into a pricing strategy focused on discounts that squeeze margins and devalue brands, Hershey is investing in innovation that “that keeps consumers hyper-interested in the category” and connects with them emotionally, while also supporting their wellness goals, said CEO Kirk Tanner at Barclays 19th Annual Global Consumer Conference last week.
“You have to win consumers over with the best ideas and core brand relevance, and that is what we are prepared to go do. That is the investment we made: To deliver a pipeline of innovation that we have for the back half of this year, and for next year,” he said.
“Innovation that has purpose, that goes after certain opportunities – if it is accessible, premium or sweets or better-for-you or functional” are what will drive the highest consumer growth, and “we are developing capabilities and skills in those areas,” he added.
Hershey steps fully into functional food
A central component to this category is the development of more functional products – a shift that may seem counterintuitive for a confection and snack company, but which Tanner said is essential to building a sustainable business.
“We’ve built a lot of capability and we are investing in resources” that allow Hershey “to go into the functional space deliberately,” Tanner said. For example, Hershey’s brands One and Fulfill protein bars are growing ahead of the category even with pressure from GLP-1 trends.
But the company is aware that to successfully compete in the functional food space it must earn consumer permission and remake its image beyond indulgence.
To do that it has teamed with the precision nutrient delivery technology company Vitakey to enhance food with vitamins, minerals and macronutrients.
“When you think about functional benefits, consumers are getting more intelligent on what is working and what is not working for them, and being able to have a protein that really has an impact, as an example,” explained Hershey CFO Dave Hulays.
The Vitakey relationship helps deliver that, and is being expanded across Hershey brands, including the One portfolio to offer a sustained 12-hour release protein that is more satiating and more effective, he said.
“That is how we build a business that is sustainable, that is grounded in science and that delivers what consumers want,” he said.
While he acknowledged Hershey’s functional food business is “small for us today,” he said, “it is a big opportunity for growth and it is one of our four growth pillars. We are very committed to it.”
Cultural moments in between major holidays are an untapped opportunity
Even as Hershey invests in functional food, it is expanding its indulgent offerings with new products and new occasions to enjoy sweet treats.
Historically, Hershey has been synonymous with occasions like Halloween, Valentine’s Day and Easter, but more recently is activating around events in between the major holidays to boost and sustain sales.
“Cultural moments are so important to consumers and our retail partners. When you walk into a store, you want to see the relevance of what’s going on in the world, what’s going in our country here, if it is domestic. That shows up in these cultural tentpole moments,” Tanner said.
He explained Hershey is “great at seasonal execution” around those “tentpole moments,” but it had an untapped opportunity in the “peaks and valleys” of those moments.
“In between the seasons there were opportunities and there were big cultural moments. The Fourth of July is a big cultural moment,” as is s’more season and fall football – which are repeatable times when consumers gather, celebrate and party with the foods and brands they love, Tanner said.
“Our brands belong in those spaces. In the past, we just executed the season, but these moments that are coming are important for the broader portfolio. And now, with the broader portfolio that we have, we have more tools to execute against these moments where consumers gather, celebrate and leverage our brands,” he explained.
“This will be a skill ongoing that we build so that we are kind of ‘always on’ with our capability versus kind of peaks and valleys, because our resources are in the marketplace to do just that,” he added.
Speed to market
To seize the opportunities presented by functional snacking and in-between moments, Hershey is increasing its innovation speed to market.
Tanner said the time from ideation to commercialization “is taking too long,” which is why the company reduced the process by 90 days.
“Holistically, being able to innovate in those spaces where consumers are looking for solutions and have higher growth than the rest of the category, and then being able to get there faster is really the area of focus that we have,” Tanner said.
Taken together, these changes and new opportunities are elevating Hershey’s position as “an innovation leader over the next several years,” Tanner added. “In the short term, delivering 2026, delivering 2027, and building a pipeline of growth for years to come is really what I am excited about, the long-term growth and profitability of the business.”
