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Confectioners — industry outlook

  • Period: 2026-08-30 to 2026-09-20
  • Events: 3
  • Generated: 2026-09-20T06:30:00.003Z

Long-Term Growth Targets and Profitability

Both companies maintain confident long-term algorithms, though their specific metrics differ. Mondelez (MDLZ) targets 3% to 5% organic sales growth and high single-digit constant currency EPS growth, explicitly aiming for strong EPS delivery by 2027. Hershey (HSY) projects 2%–4% organic sales growth and strong EPS growth for FY2027, driven by COCO deflation, productivity, and RGM. Hershey also targets mid-single-digit organic growth for both its salty snacks segment and international operations by 2027, while aiming for innovation to contribute a high single-digit percentage of revenue over a three-year horizon.

Supply Chain Modernization and Capacity

MDLZ anticipates supply chain modernization programs in the U.S. and Europe will begin delivering incremental earnings with significant benefits materializing in 2027. Similarly, Hershey (HSY) expects to resolve supply constraints for DOTS via automation in Q3 and new capacity in early 2027, with logistics and freight headwinds expected to clear by the same year. Both firms prioritize reinvesting upside into these operations and innovation rather than harvesting near-term profits.

Commodity Outlook: Cocoa Market Dynamics

The confectioners industry is currently at an inflection point regarding cocoa supply and pricing, though companies hold diverging views on the immediate trajectory. MDLZ asserts the market is currently oversupplied, with excess supply covering previous deficits and competitors covered for 10+ months, leading to a stable outlook despite El Niño risks. Conversely, Hershey (HSY) expects cocoa deflation in 2027 based on "good visibility" and current hedging strategies, viewing the current environment as one of high volatility where hedging provides flexibility. Both companies note that El Niño is a risk factor, but MDLZ explicitly states the long-term supply/demand outlook is "much better" than the previous scarcity-driven environment, while Hershey focuses on the immediate deflationary impact for 2027.

Strategic Innovation and Platform Expansion

Both companies are pivoting toward premiumization, functional nutrition, and new consumption occasions. MDLZ plans a 360-degree relaunch of Oreo in 2027 involving packaging and PPA changes, alongside the Biscoff partnership which is projected to exceed $300 million in revenue this year with a Brazil expansion planned for the beginning of next year ahead of Easter. Hershey (HSY) is accelerating its "One Hershey" model to integrate supply chains and is focusing on functional snacking, including a VitaKey partnership for protein delivery and a pipeline of Hershey Creme Bars and Reese's Pieces Cookies. Hershey is also shifting from seasonal peaks to year-round "cultural tentpoles" like s'mores and football to flatten revenue volatility, while MDLZ targets "munching" occasions with products like Oreo Minis.

Macroeconomic Headwinds and Consumer Resilience

MDLZ acknowledges economic strains in developed markets, particularly the U.S., noting that the U.S. snacking category demand remains "somewhat muted" but expects to win share through execution. Hershey (HSY) maintains "prudent assumptions" regarding consumer financial pressure and the impact of GLP-1 drugs, noting that low-income consumers are adapting through higher frequency in convenience stores and smaller packs. Both companies believe pricing power remains intact; MDLZ notes that private labels have not lowered prices and competitors are behaving rationally, while Hershey cites better-than-planned pricing elasticity and a shift in high-income consumers toward mass/club value packs.

Financial Guidance and Risk Mitigation

MDLZ has explicitly stated that all incremental costs related to the Middle East conflict have been absorbed within current guidance, protecting future periods. Hershey (HSY) executed $440M in buybacks year-to-date and raised its dividend by 6%, signaling confidence in future cash flows despite the 8-day shorter Easter in 2027 creating a modest starting point for North American confection growth. Hershey also highlights that the short-term North America confection outlook is impacted by the 8-day shorter Easter and moderated category growth as the pricing wave rolls off, a specific seasonal risk not highlighted by MDLZ for the 2027 horizon.