Hershey Seeks Exemption from Cocoa Tariffs

Cocoa prices have been fluctuating, which has affected companies like Hershey. Recently, cocoa prices have fallen, providing some relief to chocolatiers. However, the imposition of global tariffs by President Trump is expected to cause prices to rise once again. In response to this uncertainty, Hershey is seeking a tariff exemption from the White House for cocoa, which is a critical ingredient in their products. This request comes at a crucial time, as the company’s first-quarter financial results were disappointing.

During the first-quarter earnings report on May 1, Chairman and CEO Michele Buck highlighted the challenges posed by the current U.S. levy on cocoa. Buck emphasized the need to manage this exposure amid the unpredictable price fluctuations in the cocoa market. She reiterated the importance of seeking an exemption from the U.S. government to alleviate this burden.

The quarterly report mentioned that the tariff expenses, as currently projected, could amount to approximately $15-20 million in the second quarter. Despite the challenges posed by tariffs, Buck remained optimistic about the cocoa market’s future. She pointed out that recent months have seen a stabilization in cocoa prices, with the 2024/25 cocoa crop showing signs of recovery. The increase in supply from the top three global cocoa markets indicates a positive trend in cocoa production. This growth is expected to continue over the next few years, driven by increased investments in cocoa-producing regions.

Hershey’s hedging strategies are in place to counteract sudden price spikes and ensure the company can capitalize on favorable market conditions. Although tariffs on imported ingredients have impacted Hershey, the company’s domestic focus has helped mitigate some of the risks associated with tariffs.

Despite a decline in sales and net income in the first quarter, Hershey reaffirmed its sales growth outlook for the year. The company anticipates sales growth of at least 2%, although earnings per share are expected to decrease by 30-40%. While North American and international confectionery sales were down, salty snacks showed a slight increase in sales.

Looking ahead, Hershey remains committed to navigating the challenges posed by tariffs and market fluctuations. The company’s resilience and strategic planning will play a crucial role in maintaining its position in the food industry. As Hershey continues to adapt to external challenges, its focus on innovation and market growth will be key to driving future success.