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Hershey Marketing Strategy 2024: A Case Study

The Hershey Company, also known as Hershey’s, is a leading chocolate-producing company with a global presence and a wide range of chocolate brands. Founded in 1894, Hershey’s has evolved its brand and marketing strategies over the years to stay relevant in the market. Hershey’s marketing strategy focuses on strong brand equity, product originality, and superior product quality. The company has increased its investment in digital media, allocating a significant portion of its advertising budget to digital channels.

• Hershey’s emphasizes brand equity, product originality, and superior quality in its marketing strategy .
• The company invests heavily in digital media to reach a wider audience.
• Hershey’s core strength lies in brand awareness and brand reliability.
• The company employs micro-marketing techniques and creates special themed campaigns for holidays.
• Hershey’s utilizes social media platforms and its website to engage with customers and provide information about its products.

Evolution of Hershey Company

The Hershey Company, founded in 1894 by Milton Hershey, has a long history of producing chocolate products. Over the years, the company has evolved its brand and offerings to cater to changing consumer preferences and market trends .

Hershey’s early chocolate products were different from the ones we know today, with a wide variety of shapes and colorful packaging. One of the key factors contributing to Hershey’s success is its willingness to embrace change and make bold decisions in its business operations. The company has shaped and been shaped by its customers, constantly innovating its chocolate bars and introducing new products.

Hershey’s has expanded its product portfolio, acquiring and owning popular brands like Reese’s, Kit Kat, Hershey’s Kisses, and York Peppermint Patties. These iconic chocolate bars have become a staple for Americans and are recognized worldwide. The company’s commitment to innovation and adaptation has secured Hershey’s position as a leader in the confectionery industry.

In the next section, we will delve into Hershey’s marketing strategy and how it has contributed to the company’s success.

Marketing Strategy

Hershey’s marketing strategy revolves around building strong brand equity, prioritizing product originality, and maintaining superior product quality. By focusing on these core principles, Hershey’s has successfully established itself as a leading chocolate-producing company in the market.

To promote its product innovations and reach a wider audience, Hershey’s has increased its advertising budget, particularly in digital media. This shift towards digital channels allows the company to leverage the power of online platforms to connect with consumers and showcase its offerings.

One of Hershey’s main marketing strengths lies in its brand awareness and brand reliability. The company’s core brands, including Kisses, Twizzlers, Reese’s, Kit-Kat, and Hershey Bar, have become household names associated with quality and satisfaction.

Hershey’s adopts a micro-marketing approach, tailoring its strategies and product offerings to specific target audiences. This customized approach ensures that the company meets the unique demands and preferences of different customer segments.

To cater to various occasions and holidays, Hershey’s offers a range of pre-designed provisions. This allows customers to easily find products that suit their needs, whether it’s for weddings, baby showers, birthdays, or festive celebrations.

The company also invests heavily in holiday marketing, creating special themed campaigns and packaging to align with seasonal festivities. By infusing a touch of holiday spirit into its products, Hershey’s appeals to consumers looking for a delightful and festive experience.

Hershey’s marketing strategy encompasses diverse advertising campaigns that target different audiences through various mediums. The company’s recent campaigns have focused on emotional storytelling, aiming to establish a deep emotional connection with consumers.

Furthermore, Hershey’s leverages social media platforms such as Facebook, Twitter, Instagram, and YouTube to engage with its fans and share content related to its products. This social media presence allows Hershey’s to connect with a wider audience and continuously nurture its customer relationships.

In addition to social media, Hershey’s prioritizes information sharing through its website. The website serves as a hub for customers, providing detailed product information, company history, recipes, videos, and more. Customers can easily access valuable content and engage with the brand through the website and its integrated social media platforms.

Hershey’s Ad Campaigns

Hershey’s has a long history of captivating audiences through its ad campaigns, leaving a lasting impression on consumers. From its early days in the 1930s when Hershey’s promoted its chocolate syrup as a “stepping stone to health,” to the 1960s when the company began launching national ad campaigns, Hershey’s has consistently engaged different audiences.

One of Hershey’s marketing tactics has been to target specific groups, including children, dancers, immigrants, and diverse societies. By tailoring its advertising to these groups, Hershey’s ensures that its messages resonate with its intended audience.

In its ad campaigns, Hershey’s not only emphasizes the deliciousness of its products but also emphasizes the health benefits. For example, Hershey’s promoted Hershey’s instant powder as a way to encourage children to drink milk, highlighting the nutritional value of their products.

Furthermore, Hershey’s has developed a reputation for creating emotional storytelling in its ad campaigns. By telling stories that connect with consumers on a deeper level, the company establishes an emotional connection with its audience, fostering positive associations with the Hershey’s brand.

A recent example of this emotional storytelling can be seen in Hershey’s campaign featuring a young girl named Scarlett. This campaign aimed to evoke happiness and positivity, leaving a lasting impression on viewers.

Hershey’s employs various mediums, including television commercials and social media platforms, to effectively reach and engage its target audience . By utilizing these channels, the company maximizes its reach and ensures its messages are being conveyed to a wide range of consumers.

Overall, Hershey’s ad campaigns have played a pivotal role in shaping consumer perceptions and driving brand loyalty. Through innovation and continuous evolution, Hershey’s remains relevant and captivating in the ever-changing advertising landscape.

Social Media Marketing

Hershey’s understands the importance of social media in today’s digital age and utilizes popular platforms like Facebook, Twitter, Instagram, and YouTube to connect with its dedicated fans and followers. The company maintains a strong presence on these platforms, engaging with its audience and sharing updates about its products and initiatives.

With a large fan following on Facebook, Hershey’s frequently posts content to keep its audience engaged. Whether it’s showcasing new product launches or sharing fun recipes, the company leverages Facebook to create a sense of community among its loyal customers.

Instagram is another platform that Hershey’s utilizes to reach a younger audience and showcase its products through visually appealing content. The company’s Instagram feed is filled with mouthwatering images and creative posts that capture the attention of chocolate lovers everywhere.

Twitter provides Hershey’s with a direct line of communication with its customers. The company promptly responds to queries, addresses concerns, and shares updates in real-time, ensuring that its followers are always in the loop.

YouTube is a valuable platform for Hershey’s to share videos related to its products. From recipe tutorials to behind-the-scenes footage, the company engages with its subscribers through captivating visual content that drives brand awareness.

Hershey’s social media strategy focuses on creating fun and interactive content that resonates with its target audience. By utilizing these platforms, the company can generate brand awareness, showcase new products, and connect with consumers in meaningful ways.

Information Sharing Strategy

Hershey’s recognizes the importance of providing customers with easy access to valuable information about its products, history, recipes, and more. The company’s website serves as a comprehensive hub for information sharing, ensuring that customers have all the necessary details at their fingertips.

As customers navigate the Hershey’s website, they can explore detailed product information, including nutritional facts and ingredient lists. This transparency allows consumers to make informed purchasing decisions based on their dietary preferences and needs.

A highlight of the Hershey’s website is the dedicated section for recipes. Here, customers can find creative and delicious ways to incorporate Hershey’s products into their culinary creations. From mouthwatering desserts to savory snacks, the recipe section is a treasure trove of culinary inspiration.

In addition to product information and recipes, the Hershey’s website also provides customers with access to its rich history. By delving into the heritage of the brand, visitors can gain a deeper understanding of Hershey’s legacy and how it has evolved over the years.

As part of Hershey’s commitment to engaging with customers, the website includes links to other related websites, such as hersheystory.org, hersheypark.com, and hersheytheatre.com. These links offer additional resources and information, allowing visitors to further explore the Hershey’s universe.

Furthermore, Hershey’s encourages customers to share their experiences and engage with the brand through social media platforms. By linking these platforms on the website, customers can easily connect with Hershey’s across various channels and stay up to date with the latest product updates and news.

The Hershey’s website serves as a central platform for customers to connect with the brand, access product information, explore recipes, learn about the company’s history, and engage with the Hershey’s community. It is a testament to Hershey’s commitment to providing a seamless and informative experience for its customers.

In recent years, Hershey’s has embarked on a more ambitious journey, expanding its presence beyond confections into the snacks category. The company has set a bold strategy to establish Hershey as a powerhouse in both snacks and confections, catering to a wider range of consumer preferences.

Hershey’s has focused on streamlining its global operations to improve efficiency and seize growth opportunities in different geographic regions. This expansion into snacks has allowed Hershey’s to diversify its product portfolio and capture new markets.

In addition to its expansion efforts, Hershey’s has developed a more courageous culture within the company, encouraging innovation and adaptability in its business operations. This strategic approach has enabled Hershey’s to stay competitive in the ever-changing confectionery and snacks industry.

As part of its evolution, Hershey’s continues to innovate with new brands, flavors, sizes, packaging, and products to meet evolving customer expectations. The company strives to stay ahead of the competition by introducing savory and better-for-you options, catering to changing consumer demands.

Hershey’s long history and brand recognition have laid a strong foundation for its ongoing growth. With its global operations, expanded product offerings, and courageous culture, Hershey’s remains a leader in the confectionery and snacks industry.

Expansion into Snacks

One of the key aspects of Hershey’s brand evolution is its expansion into the snacks category. By venturing beyond confections, Hershey’s aims to cater to a wider range of consumer preferences and capture new market opportunities. This strategic move allows the company to diversify its product portfolio and establish itself as a powerhouse in both snacks and confections.

Global Operations

As part of its evolution, Hershey’s has focused on streamlining its global operations. By improving efficiency and seizing growth opportunities in different geographic regions, Hershey’s has positioned itself for success on a global scale. This global presence enables the company to reach a wide range of consumers and expand its market share.

Courageous Culture

Hershey’s has developed a more courageous culture within the company, fostering innovation and adaptability. By encouraging employees to think outside the box and take calculated risks, Hershey’s has been able to stay ahead of the competition and drive ongoing success. This courageous culture is a key factor in Hershey’s ability to evolve and remain at the forefront of the industry.

Hershey’s DTC Strategic Plan

To enhance its understanding of customer behavior and gather valuable first-party data, Hershey’s partnered with DEG, A Merkle Company, to develop a direct-to-consumer (DTC) strategic plan.

The primary focus of the DTC plan was to provide customers with a frictionless path to purchase, making it effortless for them to find and buy Hershey’s products online.

Hershey’s aimed to offer personalized experiences and recommendations to customers based on their preferences and behavior, creating a more engaging and tailored shopping journey.

To expand into the DTC space and drive revenue growth, the company developed a cross-channel, multi-year marketing and technology roadmap. This roadmap included targeting specific customer personas, defining channel strategies, and making media recommendations tailored to each persona.

Hershey’s launched various ecommerce initiatives to increase customer engagement and improve conversion rates. The company built a comprehensive one-stop DTC website on Salesforce Commerce Cloud, ensuring a seamless and personalized shopping experience for customers. The website design incorporated the unique identity of each Hershey’s brand to maintain a strong consumer-brand affinity.

Leveraging analytics, data append, and cross-channel media analysis, Hershey’s evaluated content performance and optimized its marketing and technology strategies. This data-driven approach helped the company refine its DTC initiatives and drive growth in the confectionery industry.

Corporate Strategy

Hershey’s executed a bold new corporate strategy aimed at fostering an entrepreneurial mindset, adaptability, and agility. The company sought to go beyond its legacy as a chocolate manufacturer and become a powerhouse in snacks as well as confections. To achieve this, Hershey streamlined its global operations to improve efficiency and expand its reach in different geographic regions.

The company focused on bolstering its core businesses and developing a more courageous culture that encourages innovation and risk-taking. Hershey executed a series of strategic acquisitions to diversify its product portfolio and enter new markets. This diversification allowed Hershey to stay ahead of changing consumer demands and market trends.

By embracing an entrepreneurial mindset and adopting a more agile approach, Hershey could make quicker and more informed decisions, enabling the company to respond rapidly to market changes. This adaptability positioned Hershey as a resilient and adaptive player in the confectionery and snacks industry, paving the way for continued growth and success in the market.

Hershey’s marketing strategy has been instrumental in its remarkable success as a leading chocolate-producing company. With a strong focus on brand equity, product originality, and superior quality, Hershey’s has built a loyal customer base and established a dominant presence in the market. Through well-executed advertising campaigns, engaging social media initiatives, and a strategic information sharing strategy, Hershey’s has effectively connected with consumers and strengthened its brand image.

The company’s evolution and expansion into new product categories, driven by an entrepreneurial mindset and adaptability, have positioned it for future growth. However, as Hershey’s faces competition from major players like Nestle and Mars, continued innovation and product diversification will be crucial to maintain its competitive edge. To this end, Hershey’s direct-to-consumer initiatives and focus on gathering first-party data will enable the delivery of personalized experiences and drive revenue growth.

By committing to enhancing the customer journey and ensuring a frictionless path to purchase, Hershey’s will solidify its position in the market. Leveraging its strong brand recognition, diverse product portfolio, and strategic marketing approach, Hershey’s is well-equipped to thrive in the competitive landscape of the confectionery industry. Looking forward, Hershey’s will build on its marketing success and adapt to changing market dynamics to maintain its leadership position and drive future growth.

What is Hershey’s marketing strategy?

Hershey’s marketing strategy focuses on strong brand equity, product originality, and superior product quality. The company has increased its investment in digital media, allocating a significant portion of its advertising budget to digital channels.

How does Hershey’s engage different audiences through its advertising campaigns?

Hershey’s has a history of engaging different audiences through its advertising campaigns, including children, dancers, immigrants, and diverse societies. The company emphasizes emotional storytelling and creating a positive association with the Hershey’s brand.

What is Hershey’s social media marketing strategy?

Hershey’s social media marketing efforts are focused on maintaining a strong presence across platforms such as Facebook, Twitter, Instagram, and YouTube to connect with its dedicated fans and followers. The company creates fun and interactive content to resonate with its target audience.

How does Hershey’s share information with customers?

Hershey’s utilizes its website as a hub for information sharing, providing details about its products, history, recipes, and engaging with customers through social media platforms. The website serves as a central platform for customers to connect with Hershey’s and access a wealth of information about its products and brand.

What is Hershey’s direct-to-consumer strategic plan?

Hershey’s partnered with DEG, A Merkle Company, to develop a direct-to-consumer (DTC) strategic plan to gather first-party data and enhance its understanding of customer behavior. The plan focuses on creating a frictionless path to purchase and offering personalized experiences to customers.

What is Hershey’s corporate strategy?

Hershey’s corporate strategy aims to establish the company as a powerhouse in both snacks and confections. The company has streamlined its global operations, fostered an entrepreneurial culture, and executed strategic acquisitions to diversify its product portfolio and enter new markets.

How has Hershey’s evolved over the years?

The Hershey Company, founded in 1894, has evolved its brand and offerings to cater to changing consumer preferences and market trends. The company has expanded its product portfolio, acquired popular brands, and innovated its chocolate bars to meet evolving customer expectations.

What are Hershey’s main strengths in marketing?

Hershey’s main strengths in marketing lie in brand awareness and brand reliability, particularly with its core brands such as Kisses, Twizzlers, Reese’s, Kit-Kat, and Hershey Bar. The company also uses micro-marketing techniques to target specific customer segments and occasions.

How does Hershey’s advertising campaigns target different audiences?

Hershey’s advertising campaigns target different audiences through various mediums and creative approaches. The company has historically targeted children, dancers, immigrants, and diverse societies. Its recent campaigns focus on emotional storytelling and creating an emotional connection with consumers.

What is Hershey’s presence on social media?

Hershey’s maintains a strong presence on social media platforms like Facebook, Twitter, Instagram, and YouTube. The company engages with its fans and followers, shares updates about its products, and creates content that resonates with its target audience.

How does Hershey’s plan to continue its growth?

Hershey’s plans to continue its growth by staying competitive, innovating its products, and embracing new marketing strategies. The company’s focus on direct-to-consumer initiatives and gathering first-party data will help drive personalized experiences and revenue growth.

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Editorial Team

Hermes marketing strategy 2024: a case study, hobby lobby marketing strategy 2024: a case study.

How Hershey Became One Of The World's Largest Chocolate Manufacturers

Table of contents, here’s what you’ll learn from hershey’s strategy study:.

• How to stay resilient, study a market and move when the timing is right.
• How to differentiate with a cost leadership strategy.
• How to adapt to market conditions and expand your product portfolio.
• How to become more proactive and respond to market trends faster.
• How to diversify while strengthening your brand.

The Hershey Company is one of the largest chocolate manufacturers and an American multinational company. Milton S. Hershey founded the company in 1894 and in 1927, he took it public.

Today, institutions own nearly 85% of the company and its CEO is Michele Buck.

Hershey’s market share and key statistics:

• Annual revenue of $8.9 billion in 2021
• Number of employees worldwide: 18,990
• Over 100 iconic brands around the world
• Total assets of $10.833 billion in 2022
• Market cap of 49.20 billion as of Feb 2023

If you want to know how Hershey’s became what it is today, grab a chocolate bar, and read on. Let’s explore how the company became a classic in the world of chocolate.

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Humble beginnings: How did Hershey's start?

While Hershey’s story begins many years later, its roots tie back to the many failed ventures of Milton S. Hershey. It was these failures that led to becoming today’s famous chocolatier.

Print to Candy

Milton Snavely Hershey was born on 18th September 1937 and spent his childhood in Pennsylvania. Hershey was not too fond of school and dropped out at the age of 12, as soon as he had learned how to read, write, and do basic math.

While Hershey’s mother supported him in the decision, his father remained against it. He had Hershey working as an apprentice at a small newspaper. However, Hershey hated his time there and knew the writing industry was not meant for him.

In 1873, Hershey began an apprenticeship nearby, at a candy factory in Lancaster. Witnessing the world of chocolate, his profession of choice transformed into becoming a candy business entrepreneur. 4 years later, he opened a candy shop in Philadelphia by borrowing capital from his aunt and uncle, the Snavely’s.

Unfortunately, within 6 six years, the aftermath of the Long Depression caught up to his venture. Although sugar prices were soaring, Hershey could still not increase the prices of his products due to the lacking effective demand as the consumers barely had any money to spare. To make matters worse, Hershey’s father, Henry, came to his shop hoping to make amends and ask for capital for this new business.

While Hershey helped, Henry’s business venture failed, and eventually, Hershey was left with too high a debt to continue operating. Therefore, the shop was shut down after going bankrupt.

Learning The Secrets of Trade

Milton S. Hershey did not back down. He traveled to Denver, became an apprentice to a local confectioner, and learned how to make caramel. There he discovered a secret in the industry: fresh milk.

Instead of using the standard Paraffin Wax in caramel-making, the use of milk ensured the caramel was soft, smooth, and lasted longer on the shelves.

Hershey knew this could be his unique selling point if he was to break into the market with milk-produced caramel. Therefore, he loaned capital from his Aunt yet again, and immediately converted his newly learned skill into a method of earning as he began to sell caramel candies on the streets of New York.

The candies were a hit! The people of New York were unaware of milk-produced caramel, and soon after, his clientele grew. However, his father visited Hershey yet again, this time asking for investment for his cough drop business. Since the business did not take off well, Hershey was left with mounting debt and consequently, this venture too failed.

Disheartened but not losing hope, Hershey moved to his hometown, Pennsylvania. There, he founded the Lancaster Caramel Company.

Caramel to Chocolate

Pennsylvania had an abundant supply of milk due to the presence of dairy farms. This observation of plentiful resources created a business idea in the mind of Hershey; he could use the local milk to produce caramel candy yet again. Since the milk would now be local instead of the imported kind, as he had used in New York, his cost of raw materials would be considerably reduced.

By getting the other raw materials, like sugar, from Philadelphia, he began production and the venture proved successful. The consumers especially liked the addition of fresh milk in the candies, which gave it its distinct taste. The caramel was shipped across the globe as its consumer base grew far and wide.

However, Hershey knew there was an opportunity for growth. He noticed exceptional demand for his caramel goodies that featured chocolate, such as the chocolate-flavored and chocolate-dipped caramel. There he understood – Chocolate had potential.

In 1893, Hershey attended the World’s Columbian Exposition in Chicago. There, his intrigue for chocolate grew as he saw, for the first time, a machine creating chocolate. As the German owner, Lehmann, offered a chocolate bar to Hershey to try, he also explained how automation had considerably reduced the cost of chocolate production, making sure that chocolate was no longer a luxury to be enjoyed by only the wealthy.

Hershey was impressed. He also then realized why his sales in Europe were declining; people were switching to chocolate. Understanding chocolate was to be the future of the confectionary world, Hershey returned to Lancaster and founded The Hershey Company in 1894. He established a milk processing plant with the initial idea that he would begin the production of caramel-covered chocolate bars.

However, as the chocolate bars themselves became a huge hit, he decided to finally bid adieu to his caramel path and invest in solely chocolate, selling his Lancaster Caramel Company for $1 million in 1900. The time of the signature Hershey’s candy bar wrapped in the iconic brown and silver wrapper had begun.

Takeaway 1: Do Not Lose The Entrepreneurial Spirit – Ever!

Milton S. Hershey had humble beginnings, a myriad of failed businesses, and several bankruptcies before he stumbled onto the world of chocolate and was finally able to embrace long-term success. However, Hershey understood his interests lay in the confectionary world and did not fear to take risks.

Hershey apprenticed at many different confectionary shops to learn the secrets of the trade and advance his skills before identifying himself as a confectionary entrepreneur. Once he knew all that he had to, he observed a gap in the market in New York and landed in the city to sell caramel goodies.

Whether it was Denver, New York, Pennsylvania, or otherwise, the lack of capital or manpower did not hinder Hershey’s in his path. He borrowed, loaned, or invested in other businesses to gain capital and started from scratch many times before finally founding The Hershey Company in 1894.

Hershey's strategy creates the milk chocolate legacy

Hershey knew his potential for success lay in chocolate. But, instead of starting small, such as in his earlier ventures, he decided to go all in.

The Hershey Town

Hershey moved back to his hometown Derry Church, Pennsylvania, and invested his money from the sale of the Lancaster Caramel Company into the construction of a chocolate processing plant.

The factory was huge, and this was not all. Hershey wanted to create an ideal town for his workers. Hershey-led developments in the town, such as the Hersheypark offering leisure activities, became key to boosting employee morale.

By 1903, the factory’s construction was completed, but the signature Hershey’s milk chocolate formula was yet to be found. Hershey enlisted the help of an engineer, John Schmalbac, from his former caramel venture. Experiment upon experiment, Hershey and Schmalbac were trying to rid the basic chocolate problem – mix and chocolate don’t mix well.

The solution was found by producing condensed milk first and consequently using that in chocolate production. The result was a sweet chocolate with a tinge of sourness – i.e., the signature Hershey’s milk chocolate.

The addition of condensed milk also ensured the chocolate could be mass-produced at an exceptionally low cost, with the ability to stay in storage for long without spoiling. This reduced the price of chocolate, making the Hershey’s bar affordable for all – just what Milton Hershey had desired. In the first year only, the sales of the Hershey’s Milk Chocolate Bar exceeded $1 million, making it an instant success in the market.

A unique company strategy

Hershey discovered that the chocolate made with condensed milk was easy to mold, as it took the shape of its container seamlessly. Therefore, in 1907, a new bite-sized milk chocolate candy was introduced – the famous “Kisses”. These were small, conical, and flat at the bottom, giving them a distinct shape. Each was wrapped by hand in aluminum foil, and given their small size, was incredibly easy to eat and carry.

Considering the unique name of the product, Hershey’s Kisses also became a popular gift among couples, especially making sales on Valentine’s Day. In 1908, Milk Chocolate Bars with Almonds were also introduced, bringing the total product tally to 3 distinct, milk chocolate products.

It was then that Hershey decided on a strategy of mass production and low pricing. The three Hershey’s products were produced and delivered throughout the United States costing no more than a nickel! Yes, really!

The strategy worked as chocolate no longer remained a candy to be enjoyed by the wealthy only but instead transformed into a household favorite sweet. Courtesy of the move, the Hershey factory almost tripled in size by 1911 as it attained new heights!

The Opportunity in Cuba

While the chocolates did well across the country, a tragedy entered Hershey’s life – his wife passed away. In grief and needing some time to himself, Hershey went for a vacation to Cuba in 1916. Little did he know, another opportunity awaited him in the country.

Cuba was full of hospitable people, a welcoming environment, and to Hershey’s astonishment, abundant sugar cane fields. By the time he was leaving for Pennsylvania, he had decided he would build a sugar field in Havana, Cuba, and transform the area as he did for Derry Church.

Although William Murrie, the Vice President of The Hershey Company, was against Hershey’s decision, the plan went ahead, and fortunately so.

It appears that Hershey’s plan was meant for the long term, as it guaranteed an abundant supply of sugar through Cuba, and milk through Derry Church, enabling the supply of two core ingredients for chocolate production.

The World War and Hershey’s

A year later, in 1917, World War had begun and there was a major sugar crisis. As the commodity became scarce and expensive, Hershey’s was able to easily meet its production demands on its own. The company also managed to score a major contract from the U.S. Army for 2 million chocolate bars. This expanded their consumer base, and consequently the reach of the company, manyfold.

Takeaway 2: Find & Leverage Your Unique Selling Point (USP)

Milton S. Hershey’s plan to set up a confectionery business was clear; to set his business apart from his competitors, he had to create a USP. This stemmed from observation of the prevailing products in the market and their consumer response. Hershey’s strategy thereby became two-pronged; create a unique, signature milk chocolate and produce in large quantities with low prices to reach most consumers.

While the signature milk chocolate recipe was found with the help of a former engineer and by analyzing the benefits of condensed milk, the low price point was achieved by ensuring a seamless, self-owned supply of milk and sugar. Consequently, the chocolate was unique, delicious, and affordable, making it a crowd favorite and churning record-breaking revenue for the company.

The Hershey’s Product Portfolio Expands

The Hershey Company had made a name for itself in the American chocolate industry. However, the competitive world caught up to the brand very soon.

Competition Requires Strategy Change

While the signature milk chocolate allure gained momentum in the market, competitor companies soon launched their newest additions. In 1917, the Clark Bar appeared on the racks. Featuring a peanut butter inside and milk chocolate top, it was the first “combination” American chocolate bar and gained much acclaim.

Baby Ruth soon followed in 1920, with a distinct combination of milk chocolate, peanuts, caramel, and nougat. Mounds, Oh Henry! Candy Bar, and the Milky Way also gained consumer attention. To deal with the competition, Hershey decided to increase production. Earlier, Hershey’s Kisses were manually wrapped which took time. In 1921, machine wrapping was introduced which sped up the process considerably and is continued till today – wrapping over 70 million chocolates every day.

However, the company’s management soon realized that simply increasing production would not be enough to tackle the competition. New products must be added to the portfolio.

Expanding The Hershey’s Product Range

After extensive market research and competitor analysis, Hershey’s team knew peanuts were in demand with chocolate, as was proven with Baby Ruth and the Clark Bar too. Therefore, in 1925, Mr. Goodbar, a combination of chocolate with milk chocolate and peanut chunks, was introduced by Hershey’s. Featuring a distinct yellow background and red text, the chocolate bar stood out among the competition.

The next year, the rich and flavorful Hershey’s Syrup made its way into the market. Used in adding to milk, layering desserts, and consuming as is, the syrup was rich and decadent and soon became a crowd favorite. In 1928, the company also introduced semi-sweet dark chocolate chips, bringing its product portfolio up to 6 distinct, products.

Reese’s Peanut Butter Cups Enter The Picture

By the 1920s, the Hershey’s empire had expanded manifold, and the introduction of Reese’s Peanut Butter Cups thrust it into a new profitable era. The cups were created by Harry Burnett Reese in 1928.

Reese had worked the Hershey’s dairy farm as a dairyman from 1917. When the factory was completed, Reese moved to work there and produced an assortment of candies and chocolates. Each was created using Hershey’s milk chocolate and was advertised and sold in the stores of Lancaster as “Made in Hershey.”

However, by 1926, Reese left the Hershey factory to build his own, which today acts as a subsidiary of The Hershey Company. Post-war, when competition and rising prices were hindering Hershey’s turnover, Reese created the Peanut Butter Cup. Featuring a milk chocolate cup base filled with peanut butter within, the confectionary masterpiece required less sugar than most candies at the time.

In addition, it was a unique sweet as most people termed peanut butter as a food item for those who couldn’t digest meat at the time. The cups were an instant success, so much so that Reese halted production of other confectionary items and focused on Reese’s Peanut Butter line only.

As their profits increased, Hershey did not treat Reese as a threat. Instead, Milton decided to supply milk chocolate for the cup base; thereby forming a close alliance with Reese’s company. In 1956, Reese passed away and left the company to his six sons. 7 years later, the company merged with Hershey in the form of a tax-free albeit stock-for-stock merger. By 1969, the peanut butter cups had become a bestseller for The Hershey Company and continue to go strong today.

Takeaway 3: Don’t hesitate to rethink your strategy

In the initial years, the Hershey's strategy was simple: Focus on a few products and ensure the production of quality confectionary items. However, as competition beckoned in the 1920s, the same strategy that was successful in launching the Hershey brand, no longer worked. In response, Hershey’s took no time to adapt to the prevailing market conditions and decided to invest in expanding its product portfolio.

From Mr.Goodbar to chocolate chips and beyond, the company created a name for itself beyond the realm of milk chocolate too. This helped attract the clientele that liked dark chocolate (such as with the chocolate chips) as well as combination chocolates (i.e., through Mr. Goodbar). Had Hershey’s remained stringent to their existing 3 products and not adapted to competition, perhaps the grand Hershey name that we see today might not have been so.

Responding To Competition

While the entry of new competitors in the chocolate industry remained unrestricted, Hershey continued to experiment with new confectionary items. The launch of Krackel in 1938, a chocolate bar with crisped rice, was one of them.

The M&M’s Introduction and Departure

As the executive management at The Hershey Company had grown, it was beyond being the one-man show as it had started off as with Milton S. Hershey. In the late 1930s, the son of Hershey’s President William F.R. Murrie, called Bruce Murrie, decided to join hands with Forrest Mars to create a new kind of chocolate. These were little, button-shaped chocolates with a hard and colorful, sugar-coated exterior and the same, delicious milk chocolate interior. The chocolates were named after Mars and Murrie and called M&Ms – the same M&Ms we addictively snack on today.

However, Murrie only held 20% ownership of the new product. Therefore, while M&Ms had begun as a joint creation of Mars and Hershey, it was bought out by Mars in 1948. This was a loss for Hershey as the M&Ms' demand grew and curated a distinct clientele across the globe, consisting of a varied demographic including children as well as adults.

World War II and Military Chocolate

It seemed that while opportunities had not been on Milton S. Hershey’s side in the initial years of doing business, the Hershey confectionary business covered for the failures in the past. In 1939, World War II broke out. While many businesses went bankrupt or were disturbed greatly, chocolate boomed.

Military chocolate had been introduced since the first World War and did well as a military food item since it was packed with energy and nutrition. Known as Field Ration D, the chocolate was packed in the U.S. military ration. However, the bar was intentionally made to not be too sweet or delicious to ensure the troops would not consider it a snack nor would be tempted to eat it.

During World War II, Hershey created a military chocolate bar for American troops that wouldn’t melt easily in the tropical heat, so as to last longer and provide greater utility.

Hershey Decides On Diversification

The end of the World War marked another end for Hershey’s legacy; Milton S. Hershey passed away in 1945. As the executive team of the company sprang into action, they kept Hershey’s plans and trajectory intact and as per the founder’s set the trajectory for many years. However, in the late 1960s, when the plan slightly changed.

The new CEO was William Dearden. He developed a corporate strategic plan for the company which included diversification as a key aspect. Thereafter, Zimmerman and Simmons were entrusted with the task of researching investments with potential.

The company acquired two pasta businesses: San Giorgio Macaroni Company and Delmonico Foods. Almost every U.S. state was supplied with Hershey's pasta with the exception of Maine, Michigan, and New Hampshire.

The pasta business was quite profitable for the company for a few years. But by the late ‘90s, the profits went down considerably as Italian exported pasta, and the American Italian Pasta Company entered the market. When sales reached $400 million in 1997, Hershey decided to sell its pasta division instead of investing for improvement. Consequently, in 1999, the pasta division was sold for $450 million in cash to the New World Pasta Group.

Disrupting Competition in the United States

As the chocolate fame grew, so did the competition. From Mars to Milky Way, the target audience began to divide their consumption among chocolates from various companies, and so The Hershey Company management had to devise a new strategy. This was when geographically bounded acquisitions became a part of the Hershey portfolio.

In the 1960s, Rowntree’s used to produce many confectionary items, of which two included Nestle and Rolo. In 1969, Hershey purchased the right to produce and market these two consumer favorites in the United States. This helped slim down American competition.

Although Nestle acquired Rowntree’s in 1988, the company was still required to honor the initial agreement made with Hershey, until The Hershey Company’s ownership changed hands. Similarly, in 1988, Hershey acquired the rights to produce and advertise many products of Cadbury (except for chewing gums and mints that were headed by Mondelez International). S

Consequently, Hershey added barriers to the geographical expansion of its competitors into the United States, while simultaneously capturing the clientele of consumer favorites like Kit Kat and Dairy Milk, etc.

Takeaway 4: Remain updated with competitor research.

While Hershey’s had helped change the image of chocolate being a solely “luxury” consumer product, many competitors had cashed in on changed perceptions. This made the chocolate industry a widely contested one and divided the consumer base into multiple factions. The Hershey Company management understood this and actively changed their corporate strategic plan to be reactive as well as proactive with competitor strategies.

There was consistent research on brimming chocolate trends in the market, and Hershey immediately caught on. This was through their own manufacture as well as acquisitions. For example, when the Kit Kat trend rose, Hershey’s gained the rights to Kit Kat production in the U.S. When the pasta market became too financially burdening, the company let their pasta division loose. Decisions like these helped maintain cash flow and sustain consumer interest in Hershey’s brand.

Acquisitions & The Pathway Forward

The Hershey Company began as a milk chocolate brand. However, its journey to becoming an empire concerning chocolate as well as many other diverse items soon followed.

The One-of-a-Kind Hershey’s Chocolate World

Hershey’s did not only provide an off-the-rack chocolate experience. Instead, the company was famous for providing behind-the-scenes intel too. What does that mean? Plant tours, of course. The Hershey Company famously provided factory tours as they showed children and adults alike how their signature milk chocolate was made (cue, Charlie and the Chocolate Factory). However, when the tours reached maximum capacity, the company decided to go a different way. On June 30th, 1973, the Hershey’s Chocolate World was created in Hersheypark Drive, Pennsylvania. 

There were several chocolate rides, including the tour of chocolate creation. In only the first year, Hershey’s Chocolate World made a staggering $1.4 million, and to date continues to garner visitors from far and wide.

Now, the park has expanded to include shops and restaurants, as well as attractions like Create Your Own Candy Bar, Hershey’s Great Chocolate Factory Mystery (4D), Hershey’s Unwrapped: A Chocolate Tasting Journey, etc. Today, Hershey’s Chocolate World is situated in 5 distinct locations, including Singapore and Niagara Falls.

The Acquisition Timeline

The Hershey Company’s growth continued to foster thanks to its innovative product development and acquisition of other brands.

The late ‘90s and early 2000s were the years of varied acquisitions for the company, thereby diversifying Hershey’s brand portfolio.

• 1986 : Hershey’s acquired Luden, a cough drop brand, as a move to diversify their portfolio, but sold it soon after. However, the 5th Avenue Bar of Luden, consisting of a peanut butter crunch of layers, is still produced and marketed by The Hershey Company and continues to be available at small retailers.
• 1996 : It acquired the Leaf Candy Company from Huhtamaki Oy which was barely managing to stay in business. The deal involved Hershey’s selling its European candy operations to Huhtamaki and strengthening its operations in North America with Leaf Candy. Moreover, Leaf’s Jolly Rancher brand of confections also helped Hershey’s extend its portfolio beyond chocolates.
• 2011 : the company acquired Brookside Foods Limited which along with producing traditional chocolate-covered nuts, sold unique chocolate-covered fruit juice pieces, allowing Hershey’s to add a distinct product to its list.
• 2015: The Hershey Company acquired Krave Junky, a protein snacks brand. It was another attempt by Hershey’s to expand its offering beyond chocolates. However, the venture didn’t prove fruitful and Krave resold it to its founder in 2020.
• 2016 : Hershey bought the famous barkTHINS, a fair trade chocolate snacks brand that had been an instant hit ever since it hit the shelves in 2013. With trends suggesting considerable growth, the acquisitions were expected to earn Hershey’s an additional $65 million to $75 million in revenue.
• 2017: Bought Amplify Snacks Brand for $1.6 billion, further cementing Hershey’s position as a snacking brand and broadening its product mix.
• 2018 : Acquired Pirate Brands, a snacks products company that focused on offering healthy products. With the takeover, Hershey’s could project a healthier image of its products and the brand overall.

From confectionary items to snack products, the Hershey brand grew considerably.

The Hershey Company Today

Recently, in June 2021, Hershey purchased the confectionary business Lily’s for $425 million, adding another feather to their cap. In November, they announced the purchase of Dot’s Pretzels as well as Pretzel Inc. for $1.2 billion, consequently expanding their snacks empire. This also came on the back of stellar few years for the Pretzels brand during the COVID-19 situation with the demand for snacking items on the rise.

In addition to Reese’s, Kisses, Kit Kat, and the signature Hershey’s, the company also heads Twizzlers, Jolly Rancher, Almond Joy & Mounds, and Payday, garnering a diverse and huge market share in the confectionery industry.

To attract Gen Z, the company has also built a user-friendly website and continues to bring improvements in its product range with creative names. The creation of the crunchy, creamy candy bar “Whozeewhatzit”, with the tagline Funny name. Serious taste. shows how the company has adapted multiple products in-line with its target audience to create a buzz.

The company has also created Hersheyland, a food blog/backing resource with different, delicious recipes of goodies you can create with Hershey’s products.

Takeaway 5: Think Bigger

The Hershey brand primarily focused on chocolate. However, instead of simply becoming a chocolate items brand, it expanded its vision to become an empire that children and adults alike would love.

The acquisition of various non-chocolate brands such as Pretzels, and the creation of Hershey’s Chocolate World and Hersheyland were proof that The Hershey Company had expanded its trajectory, instead of halting for sustenance when it became a major chocolate brand in the world.

Why is Hershey's so successful?

Today, The Hershey Company which began after multiple failures and bankruptcies has transformed into a billion-dollar empire and one of the biggest chocolate manufacturers in the world. While its headquarters are in Hershey, Pennsylvania, the chocolates have surpassed boundaries to attract and fulfill consumers from over 60 countries. The founder also created a school for orphan boys, that was given the entire Hershey fortune upon his and his wife’s passing, while the company took Milton S. Hershey’s legacy forward.

Growth By Numbers

The company was founded in 1894, about 127 years ago, and was known as the Hershey Chocolate Company. Its growth can be assessed through a look at the company’s numbers:

Strategic Takeaways

With a series of ups and downs, Hershey’s journey contains many strategic takeaways for budding entrepreneurs and chocolatiers across the world.

• Do not lose hope over failure

Milton S. Hershey did not start out with a mission to build a chocolate empire. In fact, he was far from it. He dropped out of school, went to work in printing, had numerous failed candy businesses, and multiple bankruptcies. However, since his passion lay in confectionery items, he was dedicated to never backing down. When the Great Depression arrived and sugar prices were soaring, the business evaluated and formed strategies to survive. Paving a path from caramel to candy and then chocolate, The Hershey Company did much to achieve its position today; and continues to do so.

• Set yourself apart

When Hershey began producing chocolates, the item was looked upon as one for the upper class. However, they changed their brand image by producing budget-friendly chocolate courtesy of their low cost and wide supply network. The introduction of chocolates for everyone brought Hershey’s in the eyes of most sweet lovers in the area. Although at one point, Hershey held the most market share of the milk chocolate industry, it was not a monopoly. Since barriers to entry remained low and new competitors continued to enter, Hershey focused on creating a loyal clientele, regardless of its size. This shed light on Hershey’s formula, perfected after help from a former engineer and Milton Hershey himself, and ensured the company and its products stood distinct from the others.

• Adapt to prevailing industry conditions

Initially, Hershey only dealt in 3 products, all concerning milk chocolate. However, as competition grew and peanut butter garnered consumer attention, the company immediately made decisions to maintain market share. This included not considering Reese’s as a threat but an opportunity instead and thereby supplying its milk chocolate bases. Later, when Kit Kat and Rolo attracted a wide clientele, Hershey also acquired their U.S. divisions to keep the American turnover rolling.

• Create responsive strategies

A primary reason behind the success of the Hershey Company lies in its strategy making. The management understood that when competition beckons, creating a similar, competing product isn’t the only solution. Sometimes the company did acquisitions, whole ones such as Y&S and Pretzels etc., other times it acquired geographical divisions like Cadbury and Kit Kat in the U.S. In other situations, such as its Pasta division, the company did a cost-benefit analysis and realized the profits of keeping the sector were not worth the cost of sustaining it. Therefore, at each point in the tenure, the company’s executive management created responsive strategies after careful consideration of prevailing conditions and potential outcomes.

• Diversification is key

The Hershey Company’s journey teaches one that when you want to create a company, you may focus on a particular product line or sector. However, building an empire requires spreading your wings far and wide, and this makes diversification mandatory. Hershey began as a chocolate company focusing on 3 products and now has dived into caramel, peanut butter, meat, licorice, and even beer. By diversifying into multiple product types and lines, Hershey ensures a diverse risk spread and consistent cashflow. If one brand may not be doing well, the other can cover up, and vice versa. Having its stakes in multiple product lines has also expanded the company’s reach, and therefore its consumer base, making Hershey’s a brand that is known around the globe and is a household favorite for many.

The Hershey Company Analysis Case Study

Introduction, financial analysis, swot analysis, generic strategy, resources and competences/viro, porter’s 5 forces, types of strategy – growth.

This case study focuses on The Hershey Company. It involves analysis of internal and external environments, financial statement, identification of the strategy currently used by the company and recommend future strategies. A number of theoretical concepts and models shall be applied in analyses, which would include SWOT, generic strategy VIRO/resources and competences, PESTEL, Porter’s five forces, portfolio analysis using the Boston Matrix (BCG), Ansoff matrix, the type of strategy, and feasibility of the recommendations.

The Hershey Company is the “largest manufacturer of quality chocolate in North America and a global leader in chocolate and sugar confectionery”. The company’s major products include “chocolate and sugar confectionery products; pantry items, such as baking ingredients, toppings and beverages; and gum and mint refreshment products”.

Table 1: Net Margins – source

Over the last fiscal five years, the company’s net sales have increased from $ 5,298,668 to $ 7,146,079 between the year 2009 and 2013. Its five-year compound growth rate is 6.8 percent. In the fiscal year 2013, the company’s net sales increased by 7.6 percent relative to the previous financial year and 9.3 percent between the fiscal year 2012 and 2011. The increment was attributed to “increased sales volume of core brands and new products in the US and the international market”.

At the same time, the cost of sales rose to 2.1 percent in 2013 relative to 2012.

Net Profit Margin

= Net Income/Net Sales = _____

• 435,994 /5,298,668 = 0.08 = 8.23 %
• 435,994 / 5,298,668 = 0.0823 = 8.23 %
• 628,962 / 6,080,788 = 0.1034= 10.34 %
• 660,931 / 6,644,252 = 0.0995 = 10 %
• 820,470 / 7,146,079 = 0.115 = 11.5 %

The profit margins show that the Hershey Company makes profits from its activities after deduction of all expenses.

• A strong global brand.
• Diversified portfolio that includes gum and chocolate.
• The company targets several segments, including resorts and restaurants.
• A business model developed to ensure repeat success in the global market.
• A matrix that ensures continued focus on North America and the global market.
• Acquisition of other companies such as Shanghai Golden Monkey Food Joint Stock and Brookside Foods Ltd.
• A wide variety of products.
• Loyal customers.
• Strong financial resources, management team and solid operating cash flow.
• Long-term debts.
• Increase in operational costs.
• Inability to identify potential international markets and strategic partners fast.

Opportunities

• Changing consumer tastes and preferences.
• New products for health conscious customers.
• Emerging markets globally.
• A large supply chain.
• Working with the International Cocoa Initiative Foundation to eliminate child labour.
• Improving the supply chain.
• Financial leverage.
• Use of various advertisement strategies and media.
• Rising levels of competition from Kraft Foods, Mars Inc and Wrigley.
• Changes in prices of raw materials.
• Product sourcing from third parties.
• Changes in prices of products.
• Volatility in foreign exchange rates.
• Increasing costs of doing business due to different laws and regulations across different countries.

The company has adopted a consumer-driven approach for its core brand investment in both U.S. and key international markets to drive its low-cost provider strategy.

The company leadership and the Board of Directors have worked on a broad “five-year strategic plan for both domestic and international growth”. The Hershey company currently has a global outlook with the required resources and tools to support winning strategies and promote the five core brands, namely Hershey’s, Reese’s, Hershey’s Kisses, Jolly Rancher and Ice Breakers . The company believes that its current strategies support the new long-term strategic objectives.

In 2010, many critics questioned the ability of the company to deliver long-term value to shareholders when it failed to bid for the UK Cadbury. The Hershey Company generates most of its revenues in the North America markets. Failure to bid for Cadbury was viewed as a poor strategic decision based on international expansion strategies, but the company defended itself by noting that Cadbury’s assets did not support its framework.

The company has continued to invest in tools and capabilities that support its major brand growth. These resources have focused on supporting “individual segments of chocolate, non-chocolate candy and refreshment in the U.S. and key international markets”.

The company has solid cash flow and a strong balance sheet. Hershey uses its financial resources for value enhancing strategic acquisitions. In addition, it has focused on creating a knowledge-driven company with insights from consumers and intellectual capital. Consequently, it has been able to create competitive advantage and differentiate itself from peers.

The Hershey Company believes in the potential and capabilities of its human resources, brands and processes. It has predicted that its net sales could reach $ 10 billion by the end of the fiscal year 2017 based on the solid organic growth witnessed in the past. The company has a strong strategic plan that would enable it succeed in any markets.

Generally, the company’s major markets in North America are politically stable and therefore there are limited political risks. However, its international operations in the Middle East, Africa and China among other countries could be adversely affected because of political risks and regime changes.

Fluctuating exchange rates affect the company’s earnings. Past economic recession and instability in the Euro zone have affected the company’s revenues. The growing US economy depicts favourable conditions in its major markets while emerging economies also offer better prospects.

The changing tastes and preferences of consumers towards healthier diets will affect the company’s generic products. Conversely, such trends offer opportunities for the company to provide new products for different consumers.

Technological

The Hershey Company has a global supply chain. The company would benefit greatly by automating several elements of the supply chain. It is also imperative to use technology to create competitive advantage in the industry.

Environmental

Adverse weather conditions and crop diseases have affected cocoa production and cocoa quality. The company receives nearly 72% of its cocoa from West African states, which have poor records in environmental management.

The Hershey Company must observe food quality and safety regulations to avoid legal challenges. In addition, it must also abide by various laws and regulations globally.

Buyer power

Buyer power is generally low in the industry. Many customers are end users, wholesalers, convenience stores and grocers. End users have low bargaining power while many customers are loyal to the brand. Price sensitivity is not a major concern among customers.

Intensity of Rivalry

The industry is highly competitive in both domestic and international markets, but barriers to entry, exit and consumer loyalty have protected well-established brands. The industry requires specialized equipment.

Threat of substitutes

Threats of substitutes are high for the company. Consumers may opt for other products such as snack food, other gift items like flowers or jewellery. There is no notable switching cost while recent price increase could favour substitutes.

Supplier power

This is low because the company manufacturers certain products or works with specific third parties to provide products. It has contracts with third parties with the aim of enhancing its strategic advantage and cost-effective production in product sourcing.

Threats of new entrants

Companies can only achieve economies of scale through mass production. High barriers to entry, particularly costs have created low threats from new entrants.

A portfolio analysis such as the Boston Matrix (BCG)/Industry Life cycle

These are the primary products of the company sold in the US and other markets. They include Hershey’s, Reese’s, Hershey’s Kisses, Jolly Rancher and Ice Breakers .

These products include a wide range of candy bars, chocolate, toffee bar, Soft Crèmes, snack nuts and peppermint pattie among others.

Some chocolate, sweets and refreshment products sold in the international markets. The Hershey Company does concentrate much on these products.

Question marks

Now, the company does not seem to have any questionable products in its portfolio. Nevertheless, the Hershey Company must focus on research and development (R&D) to “develop new products, improve the quality of its current products, develop new products for health conscious consumers, improve production processes and find new ways of enhancing quality and value of its major products and proposed product lines”.

Ansoff matrix

The Hershey Company could protect its market shares and acquire new customers through special offers and price-cutting strategies on many of its candy and chocolate products.

The company has a potential to attract new customers for its existing product range. It can identify a new segment of customers who prefer healthier chocolate, candy and other products. The company may also focus on emerging markets in Asia, Africa, South America and the Middle East.

The Hershey Company will continue to rely on its R&D department to develop products that appeal to many consumers, particularly health conscious customers. The Hershey Company has focused on diversification through new markets in Asia, Africa and the Middle East (international markets). The horizontal integration has allowed the company to grow globally.

The company has not withdrawn any product from the market because of decline in life cycle. However, it may be forced to withdraw products due to low quality or decline in market shares. Hershey has aggressive marketing and promotional techniques to ensure brand success.

The company has focused on a growth strategy through various ways. First, it seeks to increase revenue and profits from its existing products. In the recent past, Hershey has noted an increase in the market share and revenues in the North America markets and international markets.

Second, the company has embarked on business takeovers to grow its international operations. For instance, in 2012 and 2013, Hershey acquired Brookside Foods Ltd and Shanghai Golden Monkey Food Joint Stock respectively.

Third, it has strategic alliances on long-term basis with several companies to manufacture, sell or distribute some specific products. Some of these companies include Cadbury Ireland and UK, Société des Produits Nestlé SA and Huhtamäki Oy affiliate. Strategic alliances also aim to control price risks associated with cocoa products, sugar, corn sweeteners, natural gas, fuel, oil and certain dairy products.

Finally, the horizontal integration has ensured that the company has increased product range in existing markets.

Suitability, Acceptability and Feasibility for any recommendations

The company has recorded excellent growth in its domestic markets. Hershey, therefore, should increase its international presence to create a global brand. Hershey requires state-of-the-art technologies to enhance its international operations. It would also be beneficial if the company establishes some cocoa processing factories near its major cocoa sources. This would reduce transportation costs significantly.

As consumer tastes and preference change, the company should focus on new products and collaborate with other outlets such as Starbucks for distribution. This strategy would introduce new products, new consumers and tap new markets. The R&D must continue to be innovative in product development.

Hershey must focus on improving customer experience throughout its outlets. The company must continue to maintain good relations with all its employees in different regions.

Hershey CEO defends company strategy . (2010). Australian Food News . Web.

Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring corporate strategy: Text & Cases (8th ed.). Harlow Essex: Financial Times Prentice Hall.

The Hershey Company. (2014). FORM 10-K: 2013 Annual Report . Web.

The Hershey Company. (2012). Hershey Details Strategy for Continued Growth and Announces New Long-Term Net Sales and Earnings Targets . Web.

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IvyPanda. (2023, December 30). The Hershey Company Analysis. https://ivypanda.com/essays/the-hershey-company-analysis/

"The Hershey Company Analysis." IvyPanda , 30 Dec. 2023, ivypanda.com/essays/the-hershey-company-analysis/.

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Case Study – The Hershey Company Produces Sweet Success in Virginia

Case Study by: Virginia Economic Development Partnership

The Hershey Company is North America’s leading chocolate producer and a global snacks company. In 2019, the company celebrated the 125th anniversary of producing its iconic brands, including Hershey’s, Reese’s, Kit Kat, Jolly Rancher, Ice Breakers, SkinnyPop, and Pirate’s Booty.

Hershey established Hershey Chocolate of Virginia, Inc. in Augusta County in 1980. The Stuarts Draft plant is the company’s second-largest in the United States and primarily produces Hershey’s peanut-based products, such as Reese’s Peanut Butter Cups. Over the past 40 years, the company has expanded the operation numerous times, including the addition of a new product line in 2016, new machinery to increase production capacity in 2017, and a $104 million expansion announced in 2019 to add 111,000 square feet for the manufacture of penuche and peanut cream, which will be distributed to other Hershey facilities on the East Coast. The Hershey Company evaluated potential expansion locations nationally and ultimately chose Augusta County for its new Roasting Center of Excellence, creating 65 new jobs.

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Case Study: The Hershey Company Success Story

Reading time: 1 min

It started with the production of hand-wrapped chocolate kisses in a rural area of Pennsylvania in 1894. Now, The Hershey Company is a global entity with 18,000 employees, 70 locations, and 80 brands of candy and snacks — including the 70 million Hershey’s Kisses it produces every day.

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Company: The Hershey Company Industry: Food Processing Size: 21,000+ employees

The customer.

The Hershey Company, one of the largest chocolate manufacturers in the world, is 127 years old with revenue of over $8 billion. Headquartered in Hershey, Pennsylvania, Hershey’s offers more than 90 products, including some of the most recognizable desserts globally, such as Hershey’s Kisses, Reese’s Peanut Butter Cups, and Kit Kats. With three global distribution plants, the company sells in over 60 countries.

The Challenge

Hershey’s knew they needed to become more Agile to deliver better value while reacting to the impact of COVID-19. With much of their annual revenue upended when Halloween was canceled due to shutdowns, the company needed to innovate quickly in a time when customer behavior was quickly changing, and supply chains were being disrupted.

Hershey’s asked Rego to help them identify what was meaningful to the organization and their stakeholders and then deliver that value consistently by implementing Value Stream Management practices and tools.

The Solution

Rego was able to help Hershey’s leverage Broadcom’s ValueOps solution to reach their Value Stream Management goals. This was done quickly to help the company pivot with agility. Rego helped Hershey’s,

• Map their current processes, identify departmental silos, find bottlenecks and issues that were keeping them from delivering value quickly
• Recognize that moving towards a Product Funding model would help them meet their needs
• Empower the PMO Center of Excellence tasked with implementing Value Stream Management (VSM)
• Develop a transformation plan to evolve from the “current state” towards a “utopian end state”
• Implement their ValueOps solution on AWS, to ensure seamless upgrades and minimized expenses, as upgrades on Rego SaaS are free.

The Results

By focusing on their VSM goals, Hershey’s:

• Experienced a 38 percent growth in sales in one month alone
• Were able to quickly pivot to avoid massive supply chain issues
• Leveraged VSM and ValueOps from Broadcom to optimize their Information Systems environment

“[ValueOps] allows us to effectively manage our prioritized strategic initiatives.”

– Emma Terzian, Manager, PMO Tools

Rego is the world’s #1 reseller of Clarity by Broadcom. We provide services to 70% of Clarity’s North American customer base.

Clarity SaaS hosted on Amazon Web Services (AWS) leverages the most modern AWS cloud services to provide a secure, scalable and reliable platform for Clarity. As a select consulting partner with AWS, Rego is closely aligned with Amazon to modernize enterprise applications through the use of native AWS services with ongoing innovation.

As the leading Strategic Portfolio Management (SPM), Project Portfolio Management (PPM), Technology Business Management (TBM), Agile and expert services provider, Rego Consulting has helped hundreds of organizations achieve a higher return on their software investment, including 60% of Fortune 100 and 70% of Fortune 20 companies.

Questions? We can help. [email protected] 888.813.0444

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This is not one of those “hindsight is 20-20” cases. A reasonably prudent implementer in Hershey’s position would never have permitted cutover under those circumstances. The risks of failure and exposure to damages were simply too great. Unfortunately, too few companies have learned from Hershey’s mistakes. For our firm, it feels like Groundhog Day every time we are retained to rescue a failed or failing ERP project . To help companies implement ERP correctly – the first time – I have decided to rehash this old Hershey’s case. The two key lessons I describe below relate to systems testing and project scheduling.

ERP Systems Testing

Hershey’s implementation team made the cardinal mistake of sacrificing systems testing for the sake of expediency. As a result, critical data, process, and systems integration issues may have remained undetected until it was too late.

Testing phases are safety nets that should never be compromised. If testing sets back the launch date, so be it. The potential scheduling benefits of skimping on testing outweigh the costs of keeping to a longer schedule. In terms of appropriate testing, our firm advocates methodical simulations of realistic operating conditions. The more realistic the testing scenarios, the more likely it is that critical issues will be discovered before cutover.

For our clients, we generally perform three distinct rounds of testing, each building to a more realistic simulation of the client’s operating environment. Successful test completion is a prerequisite to moving onto to the next testing phase.

In the first testing phase – the Conference Room Pilot Phase – the key users test the most frequently used business scenarios, one functional department at a time. The purpose of this phase is to validate the key business processes in the ERP system.

In the second testing phase – the Departmental Pilot Phase – a new team of users tests the ERP system under incrementally more realistic conditions. This testing phase consists of full piloting, which includes testing of both the most frequently used and the least frequently used business scenarios.

The third and final testing phase – the Integrated Pilot Phase – is the most realistic of the tests. In this “day-in-the-life” piloting phase, the users test the system to make sure that all of the various modules work together as intended.

With respect to the Hershey’s case, many authors have criticized the company’s decision to roll out all three systems concurrently, using a “big bang” implementation approach. In my view, Hershey’s implementation would have failed regardless of the approach. Failure was rooted in shortcuts relating to systems testing, data migration and/or training, and not in the implementation approach. Had Hershey’s put the systems through appropriate testing, it could have mitigated significant failure risks.

ERP Implementation Scheduling

Hershey’s made another textbook implementation mistake – this time in relation to project timing. It first tried to squeeze a complex ERP implementation project into an unreasonably short timeline. Sacrificing due diligence for the sake of expediency is a sure-fire way to get caught.

Hershey’s made another critical scheduling mistake – it timed its cutover during its busy season. It was unreasonable for Hershey’s to expect that it would be able to meet peak demand when its employees had not yet been fully trained on the new systems and workflows. Even in best-case implementation scenarios, companies should still expect performance declines because of the steep learning curves.

By timing cutover during slow business periods, a company can use slack time to iron out systems kinks. It also gives employees more time to learn the new business processes and systems. In many cases, we advise our clients to reduce incoming orders during the cutover period.

In closing, any company implementing or planning to implement ERP can take away valuable lessons from Hershey’s case. Two of the most important lessons are: test the business processes and systems using a methodology designed to simulate realistic operating scenarios; and pay close attention to ERP scheduling. By following these bits of advice, your company will mitigate failure risks and put itself in a position to drive ERP success .

Our team has been leading successful ERP implementation projects for decades – for Fortune 500 enterprises and for small to mid-sized companies. Our methodology – Milestone Deliverables – is published and sells in more than 40 countries.

This article was originally published by Manufacturing AUTOMATION on July 30, 2010.

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The hershey co (hsy) q1 2024 earnings call transcript highlights: strategic growth and market ....

Release Date: May 03, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

Positive Points

The Hershey Co ( NYSE:HSY ) reported strong category growth for both Confection and Salty Snacks, outperforming broader food and snack category trends in Q1.

Successful seasonal performance with Valentine's category growth up 6.5% and strong share gains during the Easter season, marking 4 consecutive periods of seasonal market share gains.

Launch of innovative products like Reese's Caramel, which is the #1 innovation in the category this year, and the introduction of new Summer Seasonal Shape, Reese's Medals, in alignment with the Olympics.

Successful ERP system implementation with SAP S/4HANA went live in Q1 across U.S., Canadian, and select international markets, enhancing end-to-end connectivity and efficiency.

Robust advertising and marketing efforts, with a 12% increase in related spend in Q1, supporting brand strength and consumer engagement.

Negative Points

Continued volatility in the cocoa market, impacting costs and requiring careful management of supply chain and pricing strategies.

Planned declines in Mexico due to exiting the beverage business and softness in India impacting International segment performance.

High cocoa prices expected to drive inflation in 2025, with potential impacts on financial scenarios still being evaluated.

Gross margin pressures anticipated to continue, with full year declines expected around 200 basis points due to cocoa and sugar inflation.

Challenges in the North America Salty Snacks segment with expected declines in SkinnyPop due to broader category weakness.

Q & A Highlights

Warning! GuruFocus has detected 2 Warning Sign with HSY.

Q : Can you discuss the impact of the new ERP system on Hershey's operations? A : Michele Gross Buck, Chairman, President & CEO - The new ERP system, specifically SAP S/4HANA, went live successfully in the U.S., Canada, and select international markets. It has enhanced end-to-end connectivity and efficiency across the organization, with all systems back online and a controlled ramp-up of end-to-end processes. This implementation has allowed for successful order taking, manufacturing, shipping, and invoicing with minimal market disruption, thanks to strong planning and customer partnerships.

Q : What are the financial expectations for Hershey following the ERP implementation and the inventory adjustments made in Q1? A : Steven E. Voskuil, Senior VP & CFO - The first quarter showed a net sales growth of 8.9%, boosted by inventory adjustments linked to the ERP implementation. This growth is expected to normalize in Q2 as inventory levels adjust. The full year net sales growth outlook remains at 2% to 3%, with no change to the full year EPS outlook, expected to align with the previous year.

Q : How is Hershey addressing the volatility in cocoa prices and its impact on operations? A : Michele Gross Buck, Chairman, President & CEO - Hershey is actively engaging with governments, civil society, and industry partners to improve cocoa resilience and farmer economic stability, which includes investments in crop care and farmer education. Despite current market challenges like liquidity issues and new regulations, Hershey has robust processes to ensure supply continuity and cost visibility, with coverage for 2024 secured.

Q : What new products and marketing strategies are Hershey focusing on for future growth? A : Michele Gross Buck, Chairman, President & CEO - Hershey is launching new products like Reese's Medals and a new gummy brand, alongside marketing campaigns tied to the Olympics and new flavors for SkinnyPop and Dot's Pretzels. These initiatives are supported by strong in-store execution and increased advertising spend, aiming to drive consumer engagement and market share.

Q : How did Hershey's different segments perform in the first quarter, and what are the expectations moving forward? A : Steven E. Voskuil, Senior VP & CFO - The North America Confectionery segment saw a net sales growth of 10.4%, driven by price realization and volume growth. The Salty Snacks segment grew by 1.9%, with strength in Dot's Pretzels. The International segment grew by 1.8%, with strong performance in Europe and Latin America. The company maintains a positive outlook with strategic initiatives in place to drive continued growth.

Q : What are the projected financial impacts of the current high cocoa prices on Hershey? A : Michele Gross Buck, Chairman, President & CEO - While high cocoa prices are expected to drive inflation in 2025, Hershey is confident in its long-term outlook and strategies to mitigate inflation and protect margins. Detailed financial impacts and strategies will be shared closer to 2025 as the situation evolves and planning progresses.

This article first appeared on GuruFocus .

Allianz Direct: Advancing as Europe’s leading digital insurer

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Creating value beyond the hype

The solution.

Allianz Direct had three cornerstone goals: a fully digital business model, highly competitive market positioning, and an agile corporate culture, radiating the engineering mindset throughout the organization's activities.

With support from McKinsey, Allianz Direct built a state-of-the-art, digital platform that can be scaled across all countries in record time. The platform allows teams to learn from one another as they launch new products, improvements, and plug-and-play software. For customers, the online experience is easy to use and features many time- and cost-saving innovations with maximum self-service capabilities. In one example, Allianz Direct built a flagship service—the “60-second claim”— enabled by AI-based loss assessment and evaluation, allowing customers to process a claim in less than a minute by uploading photos and documents.

“The successful transformation can be attributed to the combination of technical excellence, sophisticated IT infrastructure, and advanced digital marketing capabilities, along with robust execution and global delivery in a compliant way. We dedicated utmost attention, allocating 150% of our focus to launch and establish our platform as a solid foundation. In addition, we complemented the approach by emphasizing key aspects such as market analysis, retail marketing strategies, pricing optimization, efficient damage management, and streamlined operations to maximize our competitiveness within the industry.” – Christoph Weber, Chief Transformation Officer Allianz Direct

Allianz Direct built momentum in the direct insurance market in Europe in just a few years by targeting two important market segments: “smart shoppers” and “price seekers.” The business provides them with the features they value, including competitive pricing and a broad online presence.

“The most impactful decision was to be stubborn about the outcome, and to never waiver on what good looks like. And that means you need to invest in the best technology and in the best people, and be really stubborn about it.” – Philipp Kroetz, Chief Executive Officer Allianz Direct

All of this was enabled by a foundational change in the organization’s culture, operational and technical excellence, and a disrupting operating model. McKinsey helped Allianz Direct create a talent strategy built around hiring the best engineers. This infusion of talent was crucial to building an agile, engineering-focused corporate culture. Today, a third of Allianz Direct’s employees work in technology or data roles. The Allianz team  created an operating model based on best-in-class technology capabilities and cross-functional agile squads responsible for creating and marketing insurance products. The result is a highly adaptive and scalable operating model that fosters cross-market collaboration.

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Urban Greening as a Response to Societal Challenges. Toward Biophilic Megacities (Case Studies of Saint Petersburg and Moscow, Russia)

• First Online: 17 March 2023

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• Diana Dushkova 8 ,
• Maria Ignatieva 9 &
• Irina Melnichuk 10  

Part of the book series: Cities and Nature ((CITIES))

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The population density in megacities is continuously increasing, resulting in a reduction of green spaces and a deterioration in the urban environment quality. Urban green is often being replaced by parking places, shopping centers, and service enterprises. This chapter examines the efforts of two megacities in Russia—Moscow and Saint Petersburg—to organize sustainable greening solutions for their residential areas using new achievements in landscape design theory and practice, such as the concept of the biophilic city. The chapter analyzes the history of greening strategies and discusses the concept of urban green infrastructure and its implementation in both Russian megacities. The chapter presents an assessment of the current state of urban green spaces and the most recent master plans and how these cities are facing and responding to modern societal challenges. The results of an analytical review of the most successful urban greening projects in Moscow and Saint Petersburg are presented as well. The economic and climatic features of the urban green areas and their architectural and planning features are considered, along with strategies for further development of the urban green spaces in both cities, aiming to address the new principles of biophilic cities.

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Acknowledgements

This work was supported by the Russian Foundation for Basic Research (RFBR) project “Mathematical-cartographic assessment of medico-ecological situation in cities of European Russia for their integrated ecological characteristics” (2018–2020) under Grant number No 18-05-406 00236/18 and by the Horizon 2020 Framework Program of the European Union project “Connecting Nature” under Grant Agreement No 730222.

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Dushkova, D., Ignatieva, M., Melnichuk, I. (2023). Urban Greening as a Response to Societal Challenges. Toward Biophilic Megacities (Case Studies of Saint Petersburg and Moscow, Russia). In: Breuste, J., Artmann, M., Ioja, C., Qureshi, S. (eds) Making Green Cities. Cities and Nature. Springer, Cham. https://doi.org/10.1007/978-3-030-73089-5_25

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Asia stocks edge to 15-month top, US inflation looms large

Asian shares crept to 15-month highs on Monday in a week where inflation figures could make or break hopes for earlier U.S. rate cuts, while Chinese activity data will test optimism about a sustained recovery in the world's No. 2 economy.