Hershey Bets on New Candy and Protein Lines Over Price Cuts

Candy is one of the few things people buy without thinking. That makes the aisle a contest of novelty rather than value packs. So when HersheyHSY posted a better-than-expected quarter recently, the company's answer wasn't lower prices. It was a bigger lab budget.

CEO Kirk Tanner has raised research-and-development spending in 2026 by 25%, his fix for a stalled innovation pipeline at the 132-year-old company.

Tanner, 58, took the job a little over a year ago after 18 months at Wendy's and most of a career at PepsiCo. His read on the category is that shoppers reach for sweets on impulse, which rewards whatever looks new on the shelf.

The rival setting the pace

Mars remains Hershey's biggest competitor and is taking market share with launches like M&M's POP'd freeze-dried candies and bite-size Twix Bits.

Evercore ISI analyst David Palmer wrote in a September note that gaining share will stay hard for Hershey until it matches Mars' innovation energy.

Pressure is coming from both ends of the aisle. Higher-end chocolatiers such as Lindt are squeezing from above, while startups like HallPass sell 70-calorie sweets from below.

Hershey's one recent blockbuster came from a collaboration rather than a solo launch. Reese's Oreo Cups, built with MondelezMDLZ, have racked up $212M in sales.

Where the new money goes

The pipeline now runs well past chocolate bars. Hershey launched Creme Bars in September in affogato and salted caramel, the first of what it calls accessible premium products priced far below artisanal chocolate.

A 2025 partnership with VitaKey, which makes time-released nutrients, is set to produce a protein powder in January.

Protein is the trend Hershey is chasing hardest. The global protein confectionery market is worth well over $2.3B and growing at a compound annual rate of 7.7%, per Report Prime.

RaboResearch senior consumer foods analyst Julia Buech cautions that not every treat is improved by adding protein, and expects the category to stay specialized.

Weight-loss drugs are reshaping the rest of the plan. Tanner says customers still love their favorites but eat less of them, which is pushing demand toward portion-controlled packs and Ice Breakers gum and mints.

The salty snack hedge

Salty snacks are Hershey's second engine, generating $1.3B in fiscal 2025 sales, up 12% from the prior year. Total company sales were $11.7B.

Dot's Homestyle Pretzels, bought along with its co-manufacturer for $1.2B in 2021, is the anchor, with $626M in sales over the last year on Circana data.

Hershey has avoided chips, where PepsiCo dominates, and stuck to popcorn, puffs, and pretzels. Tanner told analysts in September the company sees a clear line of sight to becoming the No. 2 salty player.

What has to go right

The core business still leans on pricing. Price realization added about 12% to second-quarter sales growth while volume fell about 8%, and confectionery market share declined.

Consumer takeaway for candy, mints, and gum dropped 8.6% in the same stretch. Cocoa costs drove the price increases that produced that trade-off.

After the first half, Hershey lifted and tightened its 2026 guidance, and it expects about $100M in savings from its Agility and Automation Initiative.

Hershey has also promised to switch some products back to the classic recipe by 2027 after a descendant of the Reese's inventor criticized ingredient changes.

Halloween is the first real scorecard. Reese's ranks as America's top Halloween candy in multiple surveys, and a Hershey-commissioned Morning Consult poll found two in three parents had already bought candy by July.