HERSHEY CO Q3 FY2024 earnings call

• Category resiliency: Continues to grow around 2%, outpacing other snack categories.
• Innovation: Strong innovation pipeline, with green shoots in sweets and SkinnyPop showing trend reversal.
• Market share: Gradual improvement expected, with some segments like instant consumable under pressure until first half of next year.
• New leadership: Mike from PepsiCo joining North America Confectionery brings external perspective and focus on retail and customer close.
• Inventory: Tighter inventories impacted outlook, with less restocking materializing as expected.
• GLP-1 impact: Mild year-over-year impact, consumers on GLP-1 drugs eating less chocolate categories.
• Competitive activity: International segment facing pricing competition from global competitors.
• Marketing spending: Continues to invest in brands, leveraging media for top line, share, and consumption, with focus on variety brands in instant consumable.

No detailed absolute revenue and contribution % provided for product segments in the transcript.

• Top line expected to be roughly on algorithm next year.
• Pricing next year expected to look similar to this year.
• Cocoa inflation to be a significant headwind throughout 2025, with harder to predict periods of higher inflation.
• Productivity savings efforts ongoing to offset inflation, with focus on driving savings for 2025.
• Inventory restocking impact expected to be less in 2025.

• Cocoa price volatility leading to inflationary pressures.
• Intense pricing competition in international markets, especially in smaller markets.
• Impact of GLP-1 drugs on chocolate sales, with consumers eating less of the category.
• Inventory issues and retail dynamics impacting sales and margin.
• Execution challenges in-store affecting market share.

Q: Ken Goldman asks about realized price step-up and elasticity for next year.

A: Steven Voskuil says pricing next year expected to look like this year, with historical elasticity.

Q: Andrew Lazar asks about core chocolate market share trends and new North America Confectionery head.

A: Michele Buck talks about category resiliency, gradual market share improvement, and Mike bringing external perspective.

Q: Peter Galbo asks about 2025 inflation, gross margin variance.

A: Steve Voskuil discusses cocoa as biggest inflation driver, and gross margin variance due to sales flow through, mix, and volume deleverage.

Q: Alexia Howard asks about GLP-1 impact and international competitive activity.

A: Michele Buck talks about mild GLP-1 impact and pricing competition in international markets.

Q: Robert Moskow asks about 2026 outlook and pricing clarity.

A: Michele Buck says 2026 could be above algorithm with stable cocoa, and Steve Voskuil explains pricing mix.

Q: Michael Lavery asks about marketing spending and inventory impact.

A: Michele Buck and Steve Voskuil talk about continuing marketing investment and inventory restocking not materializing as expected.

Q: Tom Palmer asks about cocoa inflation periods and cost savings.

A: Steve Voskuil says hard to predict cocoa inflation periods now, and productivity savings efforts.

Q: Max Gumport asks about cost savings and GLP-1 impact.

A: Steve Voskuil talks about cost savings breakdown and GLP-1 impact due to financial pressure.

Q: David Palmer asks about 2025 earnings and growth contributors.

A: Steve Voskuil and Michele Buck discuss earnings uncertainty and growth areas like salty, suites, seasons.

Q: Chris Carey asks about fewer headwinds in 2025 and execution.

A: Michele Buck and Steve Voskuil talk about absence of past headwinds and execution focus.

Q: Leah Jordan asks about domestic confection competition.

A: Michele Buck talks about focus on right offerings to address competition.

Q: Rob Dickerson asks about pricing and trade/media spend.

A: Steve Voskuil and Michele Buck discuss pricing mix and prioritizing core brands.