VOL. XCIV, NO. 247
★ MOAT STOCKS & COMPETITIVE ADVANTAGES ★
PRICE: 5 CENTS
Friday, December 26, 2025
The Hershey Company
HSY · New York Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
The Hershey Company is a branded confectionery and snacking manufacturer with three reportable segments: North America Confectionery, North America Salty Snacks, and International. FY2024 revenue is concentrated in North America Confectionery (~81%), which also drives most of total segment income. The primary moat is demand-side brand equity reinforced by national distribution and shelf-space execution with major retailers/distributors. Salty snacks benefits from channel overlap with confectionery but competes in a tougher, promotion-driven category with weaker pricing power, while International is smaller, more competitive, and more exposed to FX and commodity/regulatory pressures.
Primary segment
North America Confectionery
Market structure
Oligopoly
Market share
34%-38% (reported)
HHI: —
Coverage
3 segments · 6 tags
Updated 2025-12-26
Segments
North America Confectionery
Branded chocolate and non-chocolate confectionery
Revenue
81.4%
Structure
Oligopoly
Pricing
moderate
Share
34%-38% (reported)
Peers
North America Salty Snacks
U.S. salty snacks (pretzels, popcorn and adjacent categories)
Revenue
10.1%
Structure
Oligopoly
Pricing
weak
Share
—
Peers
International
Branded confectionery in selected international markets
Revenue
8.5%
Structure
Competitive
Pricing
weak
Share
—
Peers
Moat Claims
North America Confectionery
Branded chocolate and non-chocolate confectionery
FY2024 revenue/segment income basis: company-reported segment net sales and segment income from FY2024 Form 10-K.
Brand Trust
Demand
Brand Trust
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Iconic brands support consumer preference and help sustain price realization even when volumes soften.
Erosion risks
- Cocoa/input-cost inflation forces price hikes that can reduce unit volume
- Health/wellness trends and GLP-1 adoption reducing discretionary snacking
- Competitor promotion intensity and innovation cycles
Leading indicators
- U.S. chocolate/confectionery share (scanner data)
- Net price realization vs volume trend
- Seasonal sell-through and retailer order patterns
Counterarguments
- Impulse category with low switching costs; promotions can shift share quickly
- Retailers can demand higher trade spend and limit pricing
Distribution Control
Supply
Distribution Control
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 1 evidence
National retail/distributor relationships and execution (especially convenience) make scaling harder for smaller entrants.
Erosion risks
- Customer concentration increases buyer bargaining power
- Channel shift to e-commerce/direct fulfillment reduces advantage of legacy distribution
- Retailers rationalize SKUs and reduce shelf space for slower-velocity items
Leading indicators
- All-commodity volume and distribution points (ACV)
- In-stock rates and fill-rate metrics
- Customer concentration trend (share of sales to top accounts)
Counterarguments
- Large competitors can replicate national distribution
- Retailers ultimately control shelf space and pricing trade-offs
Operational Excellence
Supply
Operational Excellence
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Productivity and manufacturing/supply-chain initiatives can support cost competitiveness and reinvestment capacity.
Erosion risks
- Execution risk in manufacturing/digital transformation programs
- Labor and energy cost inflation
- Operational disruptions or quality issues
Leading indicators
- Gross margin (ex-commodity mark-to-market)
- Supply chain costs as % of sales
- Service levels (on-time, in-full)
Counterarguments
- Peers can implement similar automation and productivity programs
- Commodity costs can dominate gross margin outcomes
North America Salty Snacks
U.S. salty snacks (pretzels, popcorn and adjacent categories)
FY2024 revenue/segment income basis: company-reported segment net sales and segment income from FY2024 Form 10-K.
Scope Economies
Supply
Scope Economies
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Uses the same U.S. channels/customers as confectionery, reducing incremental distribution and selling costs.
Erosion risks
- If category buyers/sets diverge, cross-category selling synergies weaken
- Dominant salty-snack incumbents have superior route-to-market scale
- Retailers prioritize velocity; slower brands can lose facings quickly
Leading indicators
- Distribution gains for Dot's/SkinnyPop (ACV)
- Velocity per point of distribution
- Cross-merchandising wins and incremental placements
Counterarguments
- Channel overlap is common for large CPG peers, not unique
- Frito-Lay's scale and execution can overwhelm smaller brands
Distribution Control
Supply
Distribution Control
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Hershey aims to apply scale and category management to win shelf space in warehouse and other snack aisles.
Erosion risks
- Shelf-space competition with high-velocity incumbents
- Promotion intensity compresses margins
- Commodity and packaging volatility
Leading indicators
- Warehouse/club distribution points
- Pretzel/popcorn category velocity
- Promotional frequency and trade spend
Counterarguments
- Retailer shelf space is primarily performance-driven, not relationship-driven
- Distribution advantages are less durable in salty snacks than in confectionery
International
Branded confectionery in selected international markets
FY2024 revenue/segment income basis: company-reported segment net sales and segment income from FY2024 Form 10-K.
Brand Trust
Demand
Brand Trust
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
International markets can benefit from Hershey's global brands, but brand acceptance and scale are less entrenched than in North America.
Erosion risks
- Local competitors with strong cultural fit and price points
- FX volatility and macro instability
- Regulatory/tariff changes
Leading indicators
- International net sales growth and segment margin
- Market share in focus markets (where available)
- FX-adjusted revenue growth
Counterarguments
- Global competitors (Nestle, Mondelez, Ferrero) may have deeper local scale
- Consumer preferences are local; global brand strength may not translate
Operational Excellence
Supply
Operational Excellence
Strength: 2/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Local manufacturing in several countries can reduce reliance on imports, but benefits are market-specific and exposed to commodity/FX shocks.
Erosion risks
- Input-cost inflation (especially cocoa) and supply constraints
- Political/operational disruption risk
- Complex compliance requirements across jurisdictions
Leading indicators
- Factory utilization and local sourcing mix
- Cost-to-serve by region
- Commodity hedging effectiveness
Counterarguments
- Local manufacturing is common among large competitors
- Scale may still be insufficient to cover fixed costs in some markets
Evidence
More than 90 brands worldwide, including Hershey's, Reese's, Kisses, Jolly Rancher and Ice Breakers.
Shows breadth of branded portfolio underpinning demand-side brand equity.
Indicates concentrated, scaled distribution relationship (large U.S. wholesaler/distributor).
Describes a multi-year productivity program aimed at improving supply chain and manufacturing-related spend.
Hershey had the biggest chunk of the U.S. chocolate market in 2022, with nearly 36% share.
Used as an external, reported data point for U.S. chocolate market share.
States that salty snacking products are sold through the same channels to the same customers as confectionery.
Showing 5 of 8 sources.
Risks & Indicators
Erosion risks
- Cocoa/input-cost inflation forces price hikes that can reduce unit volume
- Health/wellness trends and GLP-1 adoption reducing discretionary snacking
- Competitor promotion intensity and innovation cycles
- Retailer shelf-space reallocation toward faster-growing snack categories
- Customer concentration increases buyer bargaining power
- Channel shift to e-commerce/direct fulfillment reduces advantage of legacy distribution
Leading indicators
- U.S. chocolate/confectionery share (scanner data)
- Net price realization vs volume trend
- Seasonal sell-through and retailer order patterns
- Trade spend and promotional intensity
- All-commodity volume and distribution points (ACV)
- In-stock rates and fill-rate metrics
Curation & Accuracy
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