Hershey Says Consumers See Chocolate as Affordable Luxury

As consumers cut unnecessary food purchases, chocolate still makes the grade, thanks to comfort eating.

On a call with analysts Thursday (Feb. 2) discussing the company’s fourth-quarter financial results, snack and confectionery giant Hershey observed that in the current economic climate, consumers have not been cutting out their chocolate purchase but rather leaning on them for comfort.

“Chocolate and Salty Snacks, rank as two of the top three resilient treats that consumers are not willing to forgo,” Hershey Company CEO Michele Buck said in her prepared remarks. “Chocolate moments are such a heavily integrated part of consumers’ weekly routines, from rewarding moments to stress relief to self-care, and everything in between, that they indicate they would rather cut back on other expenses to make room for chocolate because they love it so much and it’s affordable.”

Indeed, consumers have been cutting back in other categories. Research from the latest edition of PYMNTS’ Consumer Inflation Sentiment study “Consumer Inflation Sentiment: Perception Is Reality,” for which PYMNTS surveyed more than 2,100 consumers in December, revealed that 69% of consumers have made changes to their grocery shopping lists in the last year in response to rising prices, with 59% having reduced the quantities of items they are purchasing.

Yet, Hershey’s chocolate sales have remained resilient. In fact, in North America, chocolate retail sales grew 11%, sweets rose 13%, and net sales for the company’s North America Salty Snacks segment increased a whopping 71% year over year in the fourth quarter.

Buck argued that, as economic anxieties continue, the company’s offerings are all the more relevant.

“[Consumers] view these categories, and especially chocolate, as a part of emotional wellness — what it does and how it makes them feel,” she said.

The remark builds on Buck’s observations on the company’s previous earnings call that chocolate offers a financially attainable treat. While consumers many consumers may not be able to justify the expense of a fancy spa day or a tropical vacation right now, they can still comfort themselves with a candy bar.

Certainly, consumers are looking for that stress relief right now. Data from PYMNTS’ December study “Consumer Inflation Sentiment: In It For The Long Haul,” for which we surveyed more than 2,300 U.S. adults, finds that 72% of consumers are very or extremely worried about the country’s economic situation. Plus, many do not see an end in sight in the near future, with the majority agreeing that the United States is only halfway through this high inflationary period.

Additionally, the snack and confectionery company also benefits from the shift to eating at home, shifting away from restaurant dining. PYMNTS’ study “Consumer Inflation Sentiment: Inflation Slowly Ebbs, but Consumer Outlook Remains Gloomy,” which drew from a survey of more than 2,100 consumers, found that 78% have been eating at home more often to save money amid inflation.

“We know that there still is a bit more at-home behavior, versus folks cutting back on going to restaurants,” Buck said, “and certainly that’s a benefit across packaged goods snacking.”