Changing Tastes and Cost Pressures Challenge Chocolate Giants Hershey and Mondelēz
The consumer shift away from traditional sweets, combined with rising ingredient costs and evolving snacking preferences, is placing major pressure on leading confectionery giants Hershey (NYSE: HSY) and Mondelēz (NASDAQ: MDLZ). Both companies are navigating tighter grocery budgets and a slowdown in chocolate demand, particularly among younger consumers seeking healthier alternatives.
Weakening Demand Signals Structural Shift
Hershey’s stock has declined nearly 30% over the past 12 months, fueled by volume declines in its core chocolate segment and lagging performance in non-seasonal impulse purchases. Despite still holding dominant U.S. market share in chocolate and owning power brands like Reese’s and Hershey’s, the company is facing headwinds due to a combination of consumer belt-tightening and increased price sensitivity.
Meanwhile, Mondelēz is grappling with similar challenges. While brands like Oreo, Cadbury, and Chips Ahoy remain globally recognized, the company is contending with softer sales and a changing competitive landscape. Consumers are shifting toward high-protein, low-sugar snacks and increasingly scrutinizing added sugars and processed ingredients, further pressuring traditional sweet snack categories.
Cost Inflation and Pricing Limits Weigh on Margins
Higher input costs—particularly for cocoa, sugar, and dairy—are squeezing margins for both companies. Hershey in particular has limited room to pass these costs on to consumers without risking further demand erosion. Analysts note that shoppers are increasingly moving to store brands or alternative indulgences that better align with modern dietary trends, such as plant-based or low-sugar snacks.
In response, both companies have ramped up investments in product innovation, portfolio diversification, and international expansion. Mondelēz has placed a stronger focus on high-growth categories and emerging markets, while Hershey continues to expand into salty snacks, propelled by its 2021 acquisition of Dot’s Pretzels.
Long-Term Value Requires Strategic Adaptation
Despite near-term pressures, both Hershey and Mondelēz remain profitable, dividend-paying firms with strong brand equity. However, success going forward will depend heavily on their ability to realign portfolios with evolving consumer preferences. Innovation, better-for-you formulations, and targeted