“Pricing will be an important lever for us this year and is expected to drive most of our growth,” Hershey CEO Michele Buck said in prepared remarks discussing the company’s financial results Thursday.
Still, Hershey finds itself in a relatively good spot two years into the pandemic.
And Hershey’s sales growth didn’t stop in 2020. Last year, retail sales of the company’s top candy brands grew more than 12% on average, Buck said. And Hershey’s snack brands also performed well last year. Skinny Pop’s retail sales grew 22%, and Pirate’s Booty sales jumped more than 26%.
Altogether, net sales grew 10.1% for the year.
Still the company faces challenges. Demand is still outstripping supply, and Hershey is ramping up capacity to meet it.
Strategic price hikes
The candy maker has already raised prices, and consumers have accepted them. Higher prices contributed to sales growth in the fourth quarter, according to the company.
“Historically, our category has successfully been able to execute price increases and we expect that to be the case this year as well,” said Buck.
Hershey thinks customers will continue to accept the higher prices because of loyalty to its products. “They don’t want to switch to another brand,” Buck said during the analyst call Thursday.
But Hershey is planning to tread lightly, she added. “We want to carefully keep our eye on the potential impact of a broad inflation on the consumer.”
So far, other companies have been able to raise prices without scaring off consumers.