Cocoa Price Drop Poised to Boost hershey’s Profits as Halloween Approaches
NEW YORK, October 8, 2025 – A significant decline in cocoa prices is setting the stage for potential margin improvements at Hershey (HSY), just in time for the crucial Halloween season, according to analysis from TheStreet pro and reports from CNBC.The price retreat follows a period of soaring costs that squeezed profits for chocolate manufacturers.
cocoa contracts traded in London have been “extremely oversold,” according to analysts at Societe Generale, with money managers turning net short this week. They noted short positioning has reached its highest level as August 2022, making cocoa “extremely vulnerable to short covering.”
The shift in prices comes as west Africa’s latest cocoa pod count is reported to be 7% above the five-year average and “materially higher” than last year’s crop, according to chocolate maker Mondelez (MDLZ).
TheStreet Pro’s Chris Versace highlights that the falling cocoa prices are a positive development for companies reliant on the ingredient. “The price of cocoa continues to retreat from lofty levels that have plagued profits at companies whose products claim that as a key ingredient,” Versace wrote in a recent column. He specifically mentioned Hershey’s named bars and Kit Kat, as well as Mondelez’s brands including Cadbury, Milka, Toblerone, and Oreos.
While consumer spending is expected to be more cautious this year, potentially impacting overall demand for treats, Versace believes the declining cocoa prices will be a key driver of margin improvement and potential earnings per share (EPS) upside.
Hershey announced a low-double-digit-percent price increase across its candy portfolio in July. In 2024, cocoa accounted for approximately 20% of the company’s cost of goods sold – encompassing all costs associated with production, including raw materials, labor, and manufacturing overhead. At Mondelez, cocoa represents an estimated 10% of cost of goods sold, reflecting the company’s more diversified product range.
Sugar, another significant input, accounts for roughly 10% to 15% of hershey’s cost of goods sold. although sugar prices have recently rebounded, they remain below year-ago levels.
Versace indicated plans to add Hershey shares to TheStreet Pro’s investment “bullpen,” anticipating a rebound in earnings. Consensus EPS for 2026 is projected to climb around 14% to $6.77, a recovery from the expected $5.94 for this year,though still below the $9.37 posted in 2024.
Though, Versace cautioned that potential massive job cuts threatened by the Trump administration could present a demand headwind, potentially limiting the positive impact of falling input costs.
