Hershey's Salty Snack Shenanigans: Chasing Chips While Chocolate Crumbles

Oh, for fuck's sake, Hershey. The once-mighty chocolate overlord, slinging Hershey bars like they're going out of style—wait, they kinda are. Now you're eyeing salty snacks? Because nothing screams 'innovative strategy' like copying every other food hack in the game when your core product's getting priced out by volatile cocoa beans. Buckle up, diamond hands or not, because this pivot smells like desperation wrapped in a pretzel twist.

Let's get real: Hershey's been riding high on that sweet, sweet cocoa high for decades. But lately? It's been a bitter pill. Cocoa prices are fluctuating like a bad crypto trade—up, down, spiking harder than a caffeine crash. And don't get me started on the health nuts out there, preaching about sugar overload while munching on kale chips. Hershey's traditional confectionery biz is feeling the squeeze, with consumers side-eyeing those candy aisles like they're laced with regret.

Enter the salty snack saga. According to recent reports, Hershey's gunning for this segment to balloon to a whopping 20% of total revenue. That's no small nibble; it's a full-on bite out of the savory market. Why now? Diversification, baby. Or at least that's the corporate spin. With chocolate margins getting munched by rising input costs, branching into chips and puffs seems like a logical hedge. But logical and profitable are two different beasts, especially when your growth's been as flat as day-old soda.

The Chocolate Hangover: Why Hershey's Desperate for a Salty Fix

Hershey's not exactly hurting—yet. They're still pumping out dividends like clockwork, a nice pat on the back for loyal shareholders who've stuck around through the sugar rushes and crashes. But peel back the wrapper, and the numbers tell a salty tale. Recent financials? Mixed signals all over. Growth's diverging from margins, meaning sales might tick up, but profits are playing catch-up—or not at all.

Cocoa costs aren't just fluctuating; they're a goddamn rollercoaster. One minute you're sourcing beans on the cheap, the next you're paying premium for what feels like gold-dusted dirt. Health trends aren't helping either. People want 'better-for-you' options, not another bar that clogs your arteries faster than rush-hour traffic. Hershey's tried tweaking recipes, launching low-sugar lines, but let's be honest: when your brand screams 'childhood obesity enabler,' rebranding's an uphill battle.

So, salty snacks it is. Pretzels, popcorn, whatever gets that crunch without the guilt. It's a market that's been booming—everyone's stress-eating these days, right? But Hershey entering the fray? That's like the king of sweets crashing the chip party uninvited. Established players like Frito-Lay are already dominating, and Hershey's got to carve out space with... what, chocolate-dipped pretzels? Oh wait, they've done that. Groundbreaking.

Due Diligence: Is This Expansion a Crunchy Win or Just Crumbs?

Alright, let's pretend we're not just memeing here and actually dig in. Hershey's goal of 20% revenue from salty snacks isn't pulled from a hat—it's a stated target, aimed at balancing the portfolio. Confectionery's still king, but diversification's the name of the game in a world where one bad harvest can tank your year.

Growth-wise, it's murky. The company's been posting mixed results: revenue up in spots, but organic growth lagging. Margins? Diverging like a bad breakup—operating margins compressing under cost pressures while sales try to play catch-up. Investors are watching this like hawks, because if salty snacks don't deliver, it's back to square one with a side of regret.

And the dividend? Still there, thank fuck. Hershey's maintained payouts, a beacon for income chasers in this volatile market. But sustaining that while expanding? That's the real test. Acquisitions, R&D, marketing blitzes— all that costs a fortune, and if the snacks flop, you're left with a lighter wallet and saltier attitude.

Humor aside, this move's got legs if executed right. Salty snacks are less volatile than cocoa-dependent chocolate, and trends favor variety. But Hershey's no stranger to flops—remember those experimental candy lines that vanished faster than free samples? The market's crowded, competition's fierce, and execution's everything. If they nail it, great; if not, it's just another layer of disappointment on the sundae.

Roasting the Risks: Because Nothing's Sweeter Than a Good Burn

Let's turn up the salt shaker. Hershey's betting big on snacks while their chocolate core wheezes under cocoa Armageddon. Smart? Maybe. Desperate? Absolutely. The board's probably sweating bullets, thinking, 'What if consumers don't want our version of Cheetos?' Spoiler: they might not. Brand loyalty in sweets doesn't translate to savory—ask any failed crossover.

Financially, it's a tightrope. Mixed signals mean uncertainty: Q2 earnings showed revenue growth, but EPS dipped thanks to those pesky costs. Guidance? Cautious, as always. No one's popping champagne yet. And with inflation biting everyone, passing on higher prices without losing share? Good luck.

Meme potential? Off the charts. Picture Hershey's stock chart: a melting bar during cocoa spikes, perking up on snack news. Diamond hands holders are probably YOLOing into calls, dreaming of that 20% revenue moonshot. But reality check: diversification takes time, and time's not on their side with activist investors lurking.

Health trends add another roast layer. Salty snacks aren't exactly halo foods—sodium bombs waiting to explode your blood pressure. Hershey's gotta navigate 'clean label' demands without turning into a veggie chip peddler. If they botch it, expect backlash hotter than a jalapeño popper.

The Bigger Picture: Snacks or Bust?

Wrapping this up before it gets too crumbly: Hershey's salty push is a factual response to real pressures. Cocoa volatility? Check. Shifting consumer tastes? Double check. Aiming for 20% from snacks could stabilize things, but it's no magic fix. Growth and margins need to converge, not diverge like exes at a wedding.

Investors, keep your eyes peeled. This isn't a buy/sell screed—do your own homework. But if Hershey pulls it off, kudos. If not? Well, pass the chips; we'll need 'em for the schadenfreude.

Sources

• Hershey Targets Bigger Salty Snack Slice As Growth And Margins Diverge - Simply Wall St