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Hershey says supply constraints have limited sales of Dot’s Pretzels and multipacks for at least two quarters, despite improved service levels in the third quarter. The company plans to add manufacturing lines and automation, with new lines expected to start operating in the first half of 2027.
Hershey’s salty snacks business has been unable to fully meet demand for products including Dot’s Pretzels and multipacks, limiting sales for at least two quarters, company executives said. Hershey is adding manufacturing lines and investing in automation, with new lines expected to begin operating in the first half of 2027.
Hershey said service levels improved in the third quarter compared with the preceding three months, but the recovery was slower than expected. The supply constraints affected production of Dot’s products and multipacks, and the company said they limited sales and put further pressure on operating profit. The report did not specify how many products or how much potential sales were affected.
“Demand is definitely outstripping supply, but we are catching up,” CEO Kirk Tanner told analysts. Tanner said the company is adding manufacturing lines and automation to increase output and address demand for single-serve and multipack options. He said the capacity coming online is expected to support growth in Hershey’s salty snacks business in 2027 and improve how efficiently the company brings products to market.
The company’s salty snacks segment posted a 22.3% increase in net sales in its most recent quarter, according to the report. CFO Dave Hulays said LesserEvil continued “to outperform our year-to-date expectations.” Dot’s also recorded a 9% rise in third-quarter retail sales. Hershey’s overall third-quarter net sales increased 3% to $3.28 billion.
Capacity Limits a Growing Snack Business
The supply problem matters because salty snacks have become a substantial part of Hershey’s business, not a small side project. The company’s salty snacks sales totaled $1.3 billion in fiscal 2025, or roughly 11% of its business for that period. If production cannot match demand, Hershey may miss sales it could otherwise make and face added pressure on operating profit.
Dot’s is particularly important to the expansion. Circana data cited in the report put the pretzel brand’s sales at $626 million during the last year, making it Hershey’s largest salty snack brand. Hershey is also seeking to extend Dot’s into categories such as snack mixes, while capacity constraints are already affecting the brand’s existing products. The planned additions could help the company serve retailers and consumers more reliably, though the report gives no estimate of the sales the new capacity could unlock.
Hershey is also trying to grow while consumers are cautious about spending. Tanner said the company is investing in marketing and product innovation to support brand awareness amid elevated gas prices, inflation and rising interest rates. That makes the balance between generating demand and having enough product available especially relevant: promotion alone cannot translate into sales if supply remains constrained.
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Hershey’s Push Beyond Confectionery
Hershey is best known for confectionery brands such as Reese’s and Kisses, but it has built a broader snack portfolio that includes popcorn, puffs and pretzels. Its salty snack brands include LesserEvil, SkinnyPop, Pirate’s Booty and Dot’s. The expansion supports the company’s stated ambition to become a “snacking powerhouse.”
Dot’s is central to that strategy. The brand is targeting $1 billion in sales by moving into additional categories, including snack mixes, according to the report. The figure is a target, not a reported result. Recent growth in the salty snacks segment and the supply shortfall are occurring at the same time, making manufacturing capacity a near-term constraint on Hershey’s plans.
Hershey forecast fiscal 2026 net sales growth of 4.5% to 5%, with organic net sales growth of 3% to 3.5%. Those are company forecasts, not final results. The company also said it intends to invest in marketing and innovation as consumers face higher costs.
“Demand is definitely outstripping supply, but we are catching up.”
— Kirk Tanner, Hershey CEO
Scale and Timing of the Recovery
Hershey has not disclosed the precise size of the supply shortfall, the volume of additional production the new lines will provide, or how much lost sales the constraints have caused. The company said service levels improved in the third quarter but recovered more slowly than expected; it did not give a specific service-level figure or say whether all affected products are now more readily available.
The new lines are expected to start running in the first half of 2027, but the report does not identify their locations, production capacity or a more exact start date. It is also unclear how quickly automation will be installed and whether it will resolve constraints across all brands and package formats. Hershey’s fiscal 2026 growth outlook remains a forecast, and the report does not attribute that outlook solely to salty snacks.
New Lines Due in 2027
The next stated milestone is the planned start-up of new manufacturing lines in the first half of 2027. Hershey also plans to invest in automation aimed at producing single-serve and multipack options. The company has not provided a detailed construction or commissioning schedule in the information reported.
Investors and retailers will be able to track whether the supply recovery continues through later service-level and sales updates. Hershey’s next results should also clarify whether production constraints are easing and whether growth in Dot’s, LesserEvil and the wider salty snacks portfolio is being supported by added capacity. For now, the company’s stated position is that it is catching up while further production capacity remains to come online.
Key Questions
Which Hershey snack brands are affected by the supply challenges?
The report specifically identifies supply challenges affecting Dot’s products and multipacks. Hershey’s salty snacks portfolio also includes LesserEvil, SkinnyPop and Pirate’s Booty, but the report does not say that every brand is affected in the same way.
When will Hershey’s new production lines begin operating?
Hershey expects the new manufacturing lines to start running in the first half of 2027. The company has not disclosed a more exact date or the lines’ production capacity.
How large is Hershey’s salty snacks business?
Hershey’s salty snacks sales totaled $1.3 billion in fiscal 2025, about 11% of its business for that period. The figure is for fiscal 2025 and should not be read as a current quarterly sales total.
Did Hershey say the supply problems are over?
No. The company said third-quarter service levels improved from the previous three months and Tanner said Hershey was catching up. But the recovery was slower than expected, and further capacity is still due to come online.
What is Hershey doing to meet demand?
The company plans to add manufacturing lines and invest in automation, including to support single-serve and multipack production. Tanner also said Hershey is investing in marketing and innovation, although those efforts do not by themselves address production capacity.
Source: fooddive.com
