Americans may turn to chocolate for comfort during the coronavirus pandemic, and that could lead to a boost in Hershey's sales
- The Hershey Company may see a boost sales thanks in part to the coronavirus pandemic, according to a March 18 note from Credit Suisse.
- Analysts with the bank said the chocolate giant tends to see a spike in demand during crises, like the recession between 2008 and 2010.
- "We also expect the increase in impulse purchase occasions at grocery stores to offset declines in alternative channels," the bank's analysts wrote.
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Turns out, people don't lose their sweet tooth in a crisis. So, while the coronavirus pandemic may be adversely affecting businesses and industries around the world, the Hershey Company could see a boost to sales.
Credit Suisse upgraded the chocolate manufacturing giant's stock to "outperform" Wednesday, saying that the "business has proven resilient during all types of social and economic backdrops." There's a precedent for consumers turning to candy for comfort during hard times. Between 2008 and 2010, Hershey's organic sales spiked 4.7% per year, according to Credit Suisse.
"We also expect the increase in impulse purchase occasions at grocery stores to offset declines in alternative channels," the bank's analysts wrote in a March 18 note.
Analysts Ariel Altaras, Jacob Nivasch, and Robert Moskow added that they didn't anticipate that consumers would stop craving Hershey products during the Easter season, despite the epidemic. They also wrote that Hershey's "duopoly" with rival Mars ensures that the company doesn't have much to fear from third-party disruptors.
The biggest threats facing the Pennsylvania-based sweets business include health-conscious consumers abandoning the confectionery category altogether and "business disruption or weaker impulse purchase occasions during the spread of COVID-19."
But for now, whether it's a virus-themed chocolate Easter egg or on-the-fly purchases to reward a stressful grocery store run, many consumers seem set to continue to indulge their taste for sweets during the pandemic.