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Hershey executives said demand for the company’s salty snacks, including Dot’s Pretzels, has exceeded available supply for at least two quarters. The company says service levels improved in the third quarter, and it plans to add manufacturing lines and automation, with new lines expected to begin operating in the first half of 2027.
Hershey’s salty-snacks business is struggling to meet demand, with supply constraints affecting Dot’s Pretzels and multipacks for at least two quarters, company executives said this week. The company reported that service levels improved in the third quarter but recovered more slowly than expected, limiting sales as Hershey works to add production capacity.
Chief Executive Kirk Tanner told analysts that demand is outpacing supply, while saying the company is catching up. Hershey said the third-quarter improvement in service levels followed weaker performance in the preceding three months, but the pace of recovery remained below expectations. The supply problems have affected production of Dot’s and multipacks, according to the company.
Hershey expects new manufacturing lines to start running in the first half of 2027. Tanner also said the company is investing in automation to support demand for single-serve and multipack products. He described additional capacity coming online as a source of growth for the salty-snacks business in 2027 and a way to improve how products reach market.
The segment is growing quickly: Hershey’s salty-snacks net sales rose 22.3% in its most recent quarter, according to Chief Financial Officer Dave Hulays. LesserEvil continued to outperform the company’s year-to-date expectations, he said, while Dot’s third-quarter retail sales increased 9%. Hershey’s overall third-quarter net sales rose 3% to $3.28 billion.
Capacity Limits a Fast-Growing Snack Business
The supply gap matters because salty snacks have become a substantial part of Hershey’s business beyond its better-known candy brands. The company’s salty-snacks sales totaled $1.3 billion in fiscal 2025, or roughly 11% of its business that year. If products are unavailable when consumers want them, Hershey may miss sales even as demand for the segment grows.
Dot’s is central to that strategy. Circana data cited in the report put the pretzel brand’s sales at $626 million over the last year. Hershey is also pursuing growth for Dot’s in adjacent categories such as snack mixes. The company’s capacity investments could help it serve demand across brands and formats, though the expected timing means added production is not due until 2027.
Hershey’s executives also pointed to a cautious consumer environment, citing elevated gas prices, inflation and rising interest rates. Tanner said the company is investing in marketing and product innovation to encourage demand. Those efforts may support sales, but they do not resolve the immediate production limits described by executives.
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Hershey’s Expansion Beyond Candy
Hershey, known for products including Reese’s and Kisses, has built a portfolio of salty snacks that includes Dot’s Pretzels, LesserEvil, SkinnyPop and Pirate’s Booty. The expansion supports the company’s stated ambition to become a broader snacking business rather than relying only on confectionery.
The company’s fiscal 2025 salty-snacks sales of $1.3 billion provide a measure of the segment’s scale, while the latest quarter’s 22.3% net-sales increase indicates strong recent growth. These figures have different time periods and measures: one is a fiscal-year total, the other a quarterly year-over-year result. Hershey forecast fiscal 2026 net-sales growth of 4.5% to 5%, with organic net-sales growth of 3% to 3.5%.
“Demand is definitely outstripping supply, but we are catching up.”
— Kirk Tanner, Hershey CEO
Recovery Pace and Capacity Details
Hershey has not provided, in the reported details, the amount of additional output the new lines will provide, the specific locations involved or a more exact start date within the first half of 2027. The company also has not quantified how much sales were lost because of the supply constraints. Tanner said the business is catching up, but the report does not give a date for when service levels are expected to return to normal.
The 22.3% increase in quarterly salty-snacks net sales and the 9% rise in Dot’s retail sales show growth, but they do not establish how much higher sales might have been without supply limits. Hershey’s forecast for fiscal 2026 is a company-wide outlook, not a separate projection for the salty-snacks segment.
New Lines Expected in 2027
The next stated milestone is the planned start of new manufacturing lines in the first half of 2027, alongside investments in automation for single-serve and multipack production. Investors and customers will be watching whether those additions improve product availability and allow Hershey to capture more of the demand executives described.
Hershey also expects to support its brands with further marketing and innovation as it pursues its fiscal 2026 sales outlook. The company has not disclosed a separate timetable for when the current supply challenges will be fully resolved.
Key Questions
Which Hershey snack brands are affected by supply challenges?
Hershey executives said supply challenges have affected Dot’s Pretzels and multipacks. The company’s salty-snacks portfolio also includes LesserEvil, SkinnyPop and Pirate’s Booty, but the report does not say that every brand has the same supply problem.
What is Hershey doing to increase production?
The company plans to add manufacturing lines and invest in automation, including to serve demand for single-serve and multipack options. Hershey expects the new lines to start operating in the first half of 2027.
How much did Hershey’s salty-snacks sales grow?
Hershey reported a 22.3% increase in salty-snacks net sales in its most recent quarter. Separately, Dot’s third-quarter retail sales rose 9%. These are different measures, and neither figure specifies how much sales were constrained by limited supply.
When will the supply problems be resolved?
Hershey has not given a date for a full resolution. Executives said service levels improved in the third quarter but recovered more slowly than expected; additional manufacturing capacity is expected to begin coming online in the first half of 2027.
Source: fooddive.com
