Hershey’s

Hershey’s CEO said the company’s price increases “have seen a little bit better performance versus historical” price elasticity, suggesting consumers were accepting hikes. “Michele Buck – CEO: Let me start and answer your elasticity question. I’ll give it to Steve to do the disaggregation. Nik, what we are assuming for this year is historical elasticities. To date on our pricing we have seen a little bit better performance versus historical. As we go into this year, we want to carefully keep our eye on the potential impact of broad inflation on the consumer. We know that there’s been reduction, obviously, in government stimulus and SNAP, and with the inflation across the board it’s just a top of mind watch out area for us, and that’s why we really chose to say historical price elasticities is what we think is a smart and prudent planning move for us.” (Hersey Q4 2021 Earnings Call Transcript, 2/3/2022)

Hershey’s CEO: “I think we also think we’ve gotten smarter about pricing, where we have multiple levers on list price and price pack architecture that we can utilize.” “Michele Buck – CEO: At the same time, we also did implement a number of new strategies in our business over the years that we think have also helped us. We really tried to do a better job of balancing innovation and the core to get more sustainable growth. And we have seen that, that had an impact on the business. I think we also think we’ve gotten smarter about pricing, where we have multiple levers on list price and price pack architecture that we can utilize. So I guess I’d tell you, we believe that there’s part of both of that. (Hersey Q4 2021 Earnings Call Transcript, 2/3/2022)

Hershey’s CFO: “we would probably not be taking as many price increases as we’ve taken, but for the need to cover the costs that we have coming through both commodities and the rest of the P&L.” “Steve Voskuil – CFO: Sure. Even that’s kind of hard, Ken, because if I start at the very top, we would probably not be taking as many price increases as we’ve taken, but for the need to cover the costs that we have coming through both commodities and the rest of the P&L. And so even at that very top line level, it’s hard to say how the construction then below the rest of the P&L would flow through.” (Hersey Q4 2021 Earnings Call Transcript, 2/3/2022)

Hershey’s predicted “ ricing will offset the majority of our inflation.” “Steve Voskuil – CFO: Yes, a couple of things. In general pricing will offset the majority of our inflation. If I look at our commodity basket, we’ve got the biggest increases year-over-year in places like sugar and dairy and packaging materials and specialty ingredients. We have pretty good visibility into that. We’ve talked in the past about our hedging program and that gives us a pretty good picture. We’ve also got inflation from a labor standpoint, and as one of the things that Michele said, labor and manufacturing value proposition is one area that we’re leaning in pretty strongly this year. That’s a differential investment than what we’ve done in the past. And so, to answer your question, yes, pricing offsets the majority of the inflationary pieces, but it doesn’t fully offset the additional investment that we’re also making to improve the value proposition for employees.”(Hersey Q4 2021 Earnings Call Transcript, 2/3/2022)

Hershey’s CEO: “we’ve always focused on pricing pretty aggressively is one of the tools in our toolkit to deliver our P&L and to deliver our business.” “Michele Buck – CEO: Secondly, we have had great analytics over the years. We’ve always had a big focus on our elasticity models. You know that over time we’ve always focused on pricing pretty aggressively is one of the tools in our toolkit to deliver our P&L and to deliver our business. And I think we just continued to try and take that capability to the next level all the time as we’ve broadened it to, okay, we can get the insights on pricing in our category. Then we started to look at cross-category price elasticity so we could understand any trade-offs that could occur between our category and other categories. Then we started to invest in price pack architecture and look at how could we generate price realization without a list price but by changing the game.”” (Hersey Q4 2021 Earnings Call Transcript, 2/3/2022)

Hershey’s CFO suggested that overall price increases for 2022 would be 5-6%.“Pamela Kaufman – Morgan Stanley: ‘I wanted to see if you can elaborate on what level of pricing growth is embedded into your guidance for 2022. And in terms of demand elasticity, it seems you experienced some elasticity in Confectionary, but this wasn’t as evident in Snacks. Do you have different expectations for demand elasticity within Salty Snacks versus Confectionary? And how will pricing growth vary across the North America segments?’ Steve Voskuil – CFO: ‘I’ll take the first one. Overall pricing that we’ve assumed in the plan is 5 points to 6 points. In terms of the difference with the Salty Snacks business, really not a big difference from an elasticity standpoint is the way we look at that and plan for that. Those two are pretty similar. The last question I might have missed. Was there a third one? Or was that it?’” (Hersey Q4 2021 Earnings Call Transcript, 2/3/2022)