Hershey’s Hedged Cocoa Costs Delay Price Relief Until Late 2026 Despite 70% Drop
Cocoa futures fell nearly 70% from ~$12,000 to under $3,000 per ton, yet Hershey’s inventory remains hedged at last year’s elevated prices with relief unlikely until late 2026 or early 2027. U.S. chocolate demand has shifted to value channels and non-chocolate confectionery, embedding structural headwinds for Hershey’s sales volumes.
1. Cocoa Price Collapse and Hedging Impact
Cocoa futures plunged almost 70% from near $12,000 per ton in late 2024 to below $3,000 today, but Hershey remains locked into hedges executed at last year’s peak prices. These contracts prevent manufacturers from passing full cost declines to consumers until hedges roll off, delaying any material margin relief until late 2026 or early 2027.
2. Consumer Demand Shifts
Prolonged high cocoa costs prompted U.S. shoppers to trade down to private-label and bulk chocolate or switch to gummies and hard candy, signaling demand destruction. This structural shift in American buying patterns poses a persistent volume headwind for Hershey, even as raw material costs stabilize.
3. Tariff and Supply Complications
Despite a forecasted global cocoa surplus for 2025/26, a 21% U.S. import levy on Ivory Coast beans and a 10% rate on Ghana supplies blunt pass-through of lower commodity prices. Quality issues at West African ports further limit premium-grade bean availability, complicating cost savings for Hershey and other chocolate makers.