Sweet and Sour

So far, Hershey has been able to pass its rising ingredient costs along to consumers by raising prices -- or selling smaller chocolate bars at the same price. The company reported Thursday that its third-quarter earnings nearly doubled.

But Hershey's faces challenges not only from higher input costs and a weakening economy, but also from rival Mars, which has about 30 percent of the U.S. chocolate market compared to Hershey's 42 percent. Mars is the much bigger company. When worldwide sales and non-chocolate candy are taken into account, Hershey's annual sales are about $5 billion. Mars's are about $22 billion, thanks largely to its recent acquisition of Wm. Wrigley Jr.

But Mars means to beat Hershey in chocolate. In September, it opened a $70 million factory -- the "Dove Chocolate Center of Excellence" - just 10 miles from Hershey's headquarters in Pennsylvania. The Associated Press called it a "chocolate-coated slap in the face."

Meanwhile, Hershey plans to close six plants in Canada and the United States and to cut about 3,000 jobs in the U.S. At the same time, it is expanding operations in Latin America and Asia.

Hershey executives told analysts on Thursday that candy sales generally hold up well in recessions. Still, the last time demand for finished chocolate declined was in the 2001-2002 recession.