Hershey’s fast-growing salty snacks business is struggling to keep up with demand, creating supply challenges for brands like Dot’s Pretzels, executives said this week.
Supply challenges in Dot's and multipacks have impacted production for at least two quarters. Service levels during the third quarter improved from the prior three months, Hershey said, but the recovery was slower than expected, limiting sales and further pressuring operating profit.
“Demand is definitely outstripping supply, but we are catching up,” CEO Kirk Tanner told analysts.
Hershey is taking steps to meet the surge in demand. New manufacturing lines are expected to start running in the first half of 2027, and the company is investing in automation to address demand for single-serve and multi-pack options, according to Tanner.
“A lot of this is behind us, but there is still this capacity coming online that will give us good growth in 2027 on our salty business and a more efficient way to get to market,” Tanner said.
Best known for Reese’s, Kisses and other confections, Hershey has assembled a diverse portfolio of popcorn, puffs and pretzel brands to meet the company’s goal of becoming a “snacking powerhouse.”
Hershey’s salty snacks business includes LesserEvil, SkinnyPop, Pirate’s Booty and Dot’s. Sales in Hershey’s salty snacks business totaled $1.3 billion in its fiscal 2025 year, making up roughly 11% of its business during the period.
Dot’s is far and away the largest salty snacks brand for Hershey, with $626 million in sales during the last year, according to Circana data. The pretzel brand, central to Hershey's salty snack strategy, is targeting $1 billion in sales by entering other categories, such as snack mixes, that are ripe for disruption.
During Hershey’s most recent quarter, its salty snacks segment posted a 22.3% jump in net sales, with LesserEvil continuing “to outperform our year-to-date expectations,” said Dave Hulays, Hershey’s CFO. Dot’s also was a standout, with third-quarter retail sales rising 9%.
Hershey net sales during the third quarter rose 3% to $3.28 billion. The Pennsylvania company forecast net sales for its 2026 fiscal year in the range of 4.5% to 5%, with organic net sales growth between 3% and 3.5%.
Tanner added that Hershey is investing further in marketing and innovation to aggressively drive brand awareness as consumers are growing increasingly cautious amid elevated gas prices, inflation and rising interest rates.
"It is our job to stimulate demand here, and we have got those plans to do that," he said.
