Hershey offers concession to Reese’s family member with ingredient changes

Hershey (HSY) appears to be paying some respect to its heritage, with its stock price acting less than sweet.

The chocolate giant came under fire in February from Brad Reese, grandson of Reese’s founder H.B. Reese, for allegedly changing its iconic Reese’s products to use cheaper ingredients. And now Hershey plans to respond, though without crediting outsider Reese for shaking the company out of its big, profit-minded ways.

“We’re enhancing our KitKat recipe to deliver a creamier chocolate, transitioning our sweets portfolio to colors from natural sources and ensuring that all Hershey’s and Reese’s offerings are consistent with their brands, classic milk and dark chocolate recipes,” Hershey chief growth and marketing officer Stacy Taffet said at a New York City investor day on Tuesday.

The mention of being “consistent with their brands, classic milk and dark chocolate recipes” is Hershey’s way of acknowledging Reese’s concerns — without mentioning him once during the entire investor day. Bloomberg reported the company will swap out a chocolate compound coating in Reese’s and Hershey products by 2027.

Statement to Yahoo Finance from Hershey:

“Hershey is committed to making products consumers love and that means continually reviewing our recipes to meet evolving tastes and preferences.

A series of enhancements taking effect in 2027 reflect that commitment: we’re transitioning to colors from natural sources across our sweets portfolio, enhancing Kit Kat’s® recipe for a creamier taste and texture, and bringing a small portion of remaining Hershey’s and Reese’s products in line with their classic milk and dark chocolate recipes. The core recipes for our Hershey’s chocolate bars and Reese’s peanut butter cups have not changed.

These decisions are backed by meaningful investment: a 25% increase in R&D to fund talent, technology, and nutrition science across our growing portfolio of confection, salty snacks, and functional snacking brands.”

H.B. Reese invented the Reese’s Peanut Butter Cup in 1928 in the basement of his home in Hershey, Penn. His six sons sold the business to Hershey in 1963 for a reported $23.5 million in stock, equivalent to a roughly 5% stake in Hershey at the time.

The 70-year-old Brad Reese claimed on a LinkedIn post on Valentine’s Day that Hershey has replaced milk chocolate with the aforementioned compound coatings and peanut butter with peanut butter‑style crème across multiple Reese’s offerings.

He alleged the move has hurt the Reese’s brand’s standing with consumers.

“How does The Hershey Company continue to position Reese’s as its flagship brand, a symbol of trust, quality and leadership, while quietly replacing the very ingredients (Milk Chocolate + Peanut Butter) that built Reese’s trust in the first place?” Reese said in an open letter to Todd Scott, a corporate brand and editorial manager at Hershey.

Reese continued in the comment section of his post, “The Hershey Company’s Board of Directors don’t need nostalgia from me; they need visibility. When REESE’S formulation shifts start to erode the very architecture that built REESE’S, that’s not a ‘bottom‑line’ discussion, that’s a REESE’S governance discussion.”

Reese said he recently threw out a bag of Reese’s Mini Hearts, which were a new product released for Valentine’s Day. He called them inedible.

“All I have to say is our iconic Reese’s Peanut Butter Cups are made the same way they always have been; starting with roasting fresh peanuts to make our unique, one-of-a-kind peanut butter that is then combined with milk chocolate,” Scott told me. “As we’ve grown and expanded the Reese’s product line, we make product recipe adjustments that allow us to make new shapes, sizes, and innovations that Reese’s fans have come to love and ask for, while always protecting the essence of what makes Reese’s unique and special: the perfect combination of chocolate and peanut butter.”

Hershey stock dropped as the story began to take on a life of its own across social media, potentially damaging sales in the near term. It has since traded sideways despite its perceived safe-haven appeal amid the market volatility from Operation Epic Fury.

Shares are still up 14% this year as sales and earnings are expected to benefit from significant price increases, soon-to-decline cocoa costs, and Hershey’s efforts outlined on Tuesday to expand further into snacks.

The company reiterated its fiscal year 2026 guidance and expectations for 15% to 20% earnings per share growth in fiscal year 2027.

“We continue with our Hold rating noting the premium valuation for shares which we believe appropriately reflects the margin restoration and earnings growth profile through FY27,” Stifel analyst Matthew Smith wrote in a note.

Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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