Since the start of 2022, the share prices of both Hershey’s and Mondelez are negative. To anyone paying attention, that should hardly be a surprise. The last few years have seen an absolute torrent of bad news and external headwinds for both candy giants.
The biggest challenge has been inflation which began in 2021, to which neither company has been immune. Hershey’s cost of goods sold – what it spends to actually manufacture and ship its products – was $4.45 billion in 2020; it should be about $7.3 billion this year, based on analyst estimates. That’s a 64% increase, or about 10% a year for half a decade, and a few small acquisitions account for only a fraction of that jump (roughly one point a year).
Obviously, soaring cocoa prices are a key culprit; those prices have risen about 250% in just three years, and Hershey’s more chocolate-heavy business is even more exposed. But Mondelez shows how broad-based cost pressures have been: its cost of sales has gone from $16 billion five years ago to almost certainly more than $25 billion in 2025.
Those higher costs of course have pressured demand, as sticker shock turns customers off. Hershey has taken more than 20 points of pricing in the last three years; Mondelez more than 30. In 2025, both companies have decided that customers can’t take any more.
GLP-1 Drugs Are Reshaping Snack Demand
Hershey expects its adjusted earnings per share to plunge an unprecedented 36% to 38% in 2025. (To put that into context, in 2009, amid the worst of the financial crisis, Hershey’s profits rose 15%.) Mondelez is forecasting a 10% decline, excluding the effects of foreign exchange.
Inflation aside, there are other obvious reasons to worry. GLP-1 agonists like Ozempic clearly are reshaping the appetites of their users. Investors could (and likely do) fret that demand for candy and snacks will be affected even as both companies insist the effect to this point has been close to zero.
Mondelez CEO Dirk Van de Put said on an earnings call in July that a company study in North America found that “most of the negative volume that we’re seeing and the change in consumer buying is all driven economically.”
Of course, even that explanation offers yet another reason for concern: that even with no further inflation, stretched customers simply are going to be less likely to spend up for candy bars going forward. To top it off, politics may be working against the companies, with tariffs further pressuring costs and the MAHA (Make America Healthy Again) movement leading a charge against artificial dyes and even high fructose corn syrup.
Again, it is no surprise – at all – that both Hershey and Mondelez stock are down. What might be a surprise, however, is how little the stocks have fallen. Since the start of 2022, shareholders in both companies actually have seen positive total returns including dividend payments (if barely so: Hershey is +2% and Mondelez +1%). Clearly, there is some confidence in the market that each of these seemingly significant problems is temporary – or, at least, manageable.
That outlook is not necessarily unrealistic. Cocoa prices already have retreated from their highs. The history of commodity booms – even in markets like oil and copper – suggest that traders quite often overshoot, and better weather and crops in key West African producers should allow cocoa prices to retreat, eventually. Both companies have pushed back against tariffs on the product, arguing (not unreasonably) that cocoa production in the U.S. simply can’t meet the country’s demand.
Investors Bet Candy Giants Will Weather the Storm
Cost savings programs are coming at both companies to offset some of the pressures from tariffs and commodities. Hershey’s has overhauled its management, with a new CEO, new chief growth officer, and recently-hired heads of both its confectionery and salty snacks operating segments. (Investors were not terribly impressed with the CEO hire, however; the appointment of Kirk Tanner led HSY stock down more than 3%. His track record in beverages at PepsiCo, where the company lost market share, and then a year-plus at Wendy’s, where the stock price dropped, raised eyebrows.)
After a pause, Hershey’s already has taken yet more pricing, which it expects will come close to restoring profit margins in 2026.
And there is still the long-sought possibility that Hershey and Mondelez could eventually merge. Mondelez kicked the tires on a deal late in 2024, only for the Hershey board to reject the offer price as too low.
But if the difficult economic environment persists, a tie-up might make more sense; as CNBC put it last year, “Mondelez always and forever will want to buy Hershey.” Mondelez had already floated an acquisition in 2016, even though Hershey’s unique ownership (its voting power is controlled by a nonprofit trust that operates schools for underprivileged children) presents a potential stumbling block.
In other words, investors are still mostly taking the long-term view here, believing that both companies and both portfolios are strong enough to come out the other side of a historically difficult period. There are levers to pull in terms of pricing and cost, still very clearly attractive brands, and hopes for a return to normalcy. If all else fails, a merger could save billions of dollars in annual costs, increase distribution, and balance the companies’ geographic exposure (Mondelez is far stronger overseas than is Hershey).
Of course, there’s a simpler explanation as well: as difficult as the environment is right now for both companies, it almost has to get better from here.
Vince Martin is an analyst and author whose work has appeared on multiple financial industry websites for more than a decade; he’s currently the lead writer for Wall Street & Main. He has no positions in any companies mentioned.
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