Hershey’s Masterstroke: How Higher Prices Fueled Record Sales (Without the Bitter Aftertaste)

Chocolate giant cracks the pricing paradox—charging more while moving more units. Who said inflation had to hurt?

The Goldilocks Principle: Not Too Hot, Not Too Cold

Hershey's revenue charts look like a bull market in cocoa futures—except this rally isn't slowing down. Their secret? Precision price hikes that consumers barely blinked at.

Wallet Elasticity: Stretching Further Than Anyone Predicted

Turns out America's sweet tooth has a higher pain threshold than Wall Street's bean counters estimated. Premiumization strategies outperformed even during peak shrinkflation hysteria.

The Cynic's Corner

Meanwhile, hedge funds still can't decide if consumer staples are inflation hedges or recession casualties—maybe try reading a candy wrapper once in a while?

Key Takeaways

• Companies from Hershey Co. to the Cheesecake Factory to Scholastic have recently said they will be raising prices.
• Hershey believes it has pinpointed price increases for candy and gum that will allow it to maintain sales, CEO Michele Buck said.
• Another company dealing with soaring cocoa prices, Mondelēz International, is also attempting to raise prices without depressing demand.
  

Companies have long deliberated over how much they can raise prices without losing sales. Hershey Co. thinks it's found the sweet spot.

Hershey (HSY) said it changed prices in July for much of its domestic confection division—which includes chocolate, gum and other candy—by charging more and altering package design and size, executives said. The attempt to compensate for soaring cocoa prices will have “no significant effect on sales anticipated for 2025,” CEO Michele Buck said on a second-quarter earnings call Wednesday.

Hershey expects the price changes' impact on consumer demand to have a “1-to-1” price elasticity ratio, company executives confirmed to analysts, meaning that for every bump up in price, demand is expected to tick down by an equal percentage. That should shake out in a way that keeps sales strong and earnings “on algorithm" for 2026, Buck and CFO Steven Voskuil said.

The company has "modeled this exhaustively,” Voskuil said, according to a transcript of the call made available by AlphaSense. “Overall, the elasticities are probably a little bit more favorable than what we've seen in history.”

The price increases won’t completely cover rising cocoa expenses, and will ensure 75% of products cost less than $4, Hershey executives said. Another candy and snack company raising prices, Mondelēz International (MDLZ), also wants lots of products available for $3 to $4, it said on an earnings conference call this week. 

Chocolate prices have gone up 30% to 50% in the last two years, and consumers have been buying the sweet in smaller quantities and less frequently, Mondelēz CFO Luca Zaramella said. Yet, by being “surgical” about price increases and packaging, Mondelēz, which makes Oreo Cookies and Cadbury chocolates, said it believes “there is not going to be a material volume repercussion" for its customers' consumption, Zaramella said, according to a transcript. 

A number of companies are also raising what they charge customers. Menu prices will increase about 3.5% year-over-year in the second half of 2025 at The Cheesecake Factory’s (CAKE) namesake restaurants, but the chain will also be adding more lower-priced dishes, CFO Matthew Clark said Tuesday in his company's earnings call.  

Tariffs are prompting several companies to raise prices, including the shoe company Deckers Outdoor (DECK), the children’s apparel group Carter’s (CRI), the educational publisher Scholastic (SCHL), and toy giants Mattel (MAT) and Hasbro (HAS), their executives said recently.