EDUCATORS’ PERSPECTIVE
Milton S. Hershey( Part 1): Chocolatier, Risk-Taker, Gambler
By Brian Grinder and Dan Cooper
In 2025, the Hershey Company lost $ 423 million trading commodities futures. The year before, however, Hershey posted a $ 460 million gain primarily in the volatile cocoa futures market.“ Cocoa,” noted Wall Street Journal writers Aimee Look and Joe Stoner,“ has burned chocolatiers before.” If this is so, why does Hershey engage in commodities futures trading? The answer can be found in the Hershey Company’ s most recent annual report( 2025 Form 10-K):
We enter into commodities futures and options contracts and other derivative instruments for varying periods. These commodity derivative instruments are intended to be, and are effective as, economic hedges of market price risks associated with anticipated raw material purchases, energy requirements and transportation costs. We do not hold or issue derivative instruments for trading purposes and are not a party to any instruments with leverage or prepayment features.
Hershey is engaged in the time-honored tradition of hedging. It’ s an activity that allows them to lock in the prices of product inputs, such as cocoa and sugar, in order to reduce future price uncertainty. However, the founder of the Hershey Company, Milton S. Hershey, traded sugar and cocoa futures not as a hedger, but as a speculator. His ventures in commodities futures were unsuccessful and put his company in financial jeopardy.
Hershey took many risks as he built his candy empire. Before chocolate, he focused on caramel. After failures in Philadelphia and New York, he finally hit on a winning caramel recipe. That recipe, along with favorable economic circumstances, led to a huge payoff when Hershey sold his Lancaster Caramel Company to a competitor for $ 1 million on August 10, 1900.
Hershey had already decided to switch to making milk chocolate when he sold the caramel business. At the time, chocolate
Portrait of Milton S. Hershey, 1910.
was a luxury only the rich could afford. Hershey’ s goal was to make it available to the masses, but he didn’ t know how to make it yet. After some experimentation, Hershey decided to build an enormous factory and a company town in rural Pennsylvania. The factory was nearly completed before Hershey finally found a satisfactory milk chocolate recipe in the fall of 1903. Hershey biographer Michael D’ Antonio called the construction of the
Hershey Community Archives
Postcard of the Hershey Chocolate Company’ s sugar mill and plantation in Cuba, 1922.
8 FINANCIAL HISTORY | Fall 2026 | www. MoAF. org