Hershey Says Salty Snack Demand Is Outrunning Supply
Supply problems at Dot's Pretzels and multipacks have weighed on Hershey for at least two quarters. New manufacturing lines are due in the first half of 2027.
Hershey's fast-growing salty snacks business is struggling to keep up with demand, executives said this week. The shortfall is creating supply problems for brands such as Dot's Pretzels.
"Demand is definitely outstripping supply, but we are catching up," CEO Kirk Tanner told analysts.
Supply challenges in Dot's and multipacks have affected production for at least two quarters. Service levels improved in the third quarter from the prior three months. Hershey said the recovery was slower than expected, which limited sales and put further pressure on operating profit.
More capacity coming
New manufacturing lines are expected to start running in the first half of 2027. The company is also investing in automation to serve demand for single-serve and multipack options, Tanner said.
"A lot of this is behind us, but there is still this capacity coming online that will give us good growth in 2027 on our salty business and a more efficient way to get to market," he said.
Best known for Reese's and Kisses, Hershey has built a portfolio of popcorn, puffs and pretzel brands. It includes LesserEvil, SkinnyPop, Pirate's Booty and Dot's. The salty snacks business had sales of $1.3 billion in fiscal 2025, roughly 11% of the company total.
Dot's is by far the largest of those brands, with $626 million in sales over the last year, according to Circana data. Hershey is targeting $1 billion in sales for the pretzel brand by entering other categories, such as snack mixes.
The quarter in numbers
In the most recent quarter, net sales in the salty snacks segment jumped 22.3%. CFO Dave Hulays said LesserEvil continued to outperform year-to-date expectations. Dot's retail sales rose 9% in the third quarter.
Hershey's overall third-quarter net sales rose 3% to $3.28 billion. For its 2026 fiscal year, the Pennsylvania company forecast net sales growth of 4.5% to 5%, with organic growth between 3% and 3.5%.
Tanner said Hershey is putting more money into marketing and innovation as consumers grow more cautious amid elevated gas prices, inflation and rising interest rates. "It is our job to stimulate demand here, and we have got those plans to do that," he said.
Source: Food Dive