Investing.com -- Grizzly Research issued a short report on The Hershey Company (NYSE:HSY) Wednesday, raising concerns over the presence of potentially harmful "forever chemicals" (PFAS) detected in the packaging of several of Hershey's popular products.
The short seller claims that independent tests found heightened levels of PFAS contamination in the wrappers of numerous Hershey products, including Reese's Pieces, Almond Joy, and Hershey's Kisses.
PFAS chemicals, which are linked to cancer and other health risks, are commonly used in packaging coatings but are increasingly being regulated or banned.
Grizzly noted that PFAS toxins are particularly dangerous for children and stated, "PFAS, or 'forever chemicals,' are carcinogenic, and a ban or phase-out for plastic food and candy packaging was introduced until 2024 in at least 13 U.S. states."
Grizzly said it commissioned tests from four different labs across the U.S., Germany, and China to compare Hershey's packaging with competitors like Mars and Nestlé.
"All four labs found heightened traces of PFAS in various HSY's products but none or negligible amounts in products by Mars and Nestlé," the report said.
Of the 50 tests conducted, Grizzly claims 20 cases of PFAS contamination over 10 mg/kg were found, with 19 involving Hershey's products.
The report further alleges that Hershey may be using "uncommon, harder-to-detect PFAS compounds" to bypass regulatory bans while still exposing consumers to health risks.
"Our expert heading this case believes that HSY deliberately uses uncommon, harder-to-detect PFAS compounds to avoid detection and bans, while the negative health implications of such uncommon substances remain similar," they argue.
Grizzly added that "as of today, the FDA's Food Contact Substance database does not show any authorization of PFAS use for HSY."
Given Hershey's reliance on North American sales, Grizzly warns that these findings could pose significant legal, reputational, and financial risks for the company.
The firm believes that this issue "can materially affect these brands' recognition and add material reputational and litigation risk to HSY."