Snacks & Candy

Demand for Hershey Products Predicted to Remain High

Credit Suisse U.S. says Hershey’s confectionery business is resilient
Photograph: Shutterstock

NEW YORK — The Hershey Co.’s business is resilient through all types of social and economic backdrops, according to a March 18 report from Credit Suisse U.S., New York.

“Management agrees with our view that demand for Hershey products during Easter will remain high during the COVID-19 crisis,” Credit Suisse research analysts Robert Moskow, Ariel Altaras and Jacob Nivasch said. “We also expect the increase in impulse purchase occasions at grocery stores to offset declines in alternative channels. For context, Hershey’s organic sales grew 4.7% per year during the last recessionary period of 2008 to 2010.”

Investments in capacity, media development, late-stage customization and ERP systems to improve its flexibility and visibility have strengthened the Hershey, Pa.-based company’s competitive advantages, the report said.

Hershey’s in-house media capabilities allow the company to adjust to changes in market dynamics, according to Credit Suisse. Hershey quickly changed its advertising content for Reese’s when the NCAA canceled the March Madness tournament due to the coronavirus outbreak.

Hershey has a strong balance sheet with a debt/EBITDA ration of 2.1x. Its price target is $160, compared to the average sell-side price target of $149.11, according to Credit Suisse. The company said it expects Hershey will announce a price increase in 2020 for the third year in a row.

Some risks Hershey faces are a slowdown in consumer demand in the confectionery category due to health and wellness concerns, business disruption or weaker impulse purchase occasions during the spread of COVID-19 and cocoa-growing nations raising prices, the report said. 

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