About Hershey Company

The Hershey Company works to spread Almond Joy and lots of Kisses. With its portfolio of more than 80 global brands, the #1 chocolate producer in North America has built a big business manufacturing such well-known chocolate and candy brands as Hershey's, Kisses, Reese's peanut butter cups, Twizzlers, Mounds and Almond Joy candy bars (under a license), York peppermint patties, and Kit Kat wafer bars. Hershey also makes grocery goods, including baking chocolate, chocolate syrup, cocoa mix, cookies, snack nuts, breath mints, and bubble gum. Products from the chocolate king are sold to a variety of wholesale distributors and retailers throughout North America and exported overseas.

Operations

Hershey's operations consist of two business segments (North America; and International and Other), in which more than 80 name brands are made, marketed, sold, and distributed. Many product types sold under the Hershey's, Kisses, and Reese's names are included in the company's chocolate business unit. Other popular brand franchises -- such as Twizzlers, Mounds, York, Kit Kat, Ice Breakers, and Bubble Yum -- fall within the company's sweets and refreshment business unit.

Geographic Reach

Hershey has two reportable segments: North America and International and Other. North America is the largest segment (accounting for 88% of the total revenue) and caters to the traditional chocolate and non-chocolate confectionery market, as well as grocery and growing snacks markets, within the US and Canada.

International and Other (12%) has operations in China, Mexico, Brazil, India, and Malaysia, primarily for consumers in these regions. The segment also distributes and sells confectionery products in export markets within Asia, Latin America, Middle East, Europe, Africa and other regions. It also includes global retail operations, including Hershey's Chocolate World stores in Hershey, Pennsylvania; New York; Las Vegas; Shanghai; Niagara Falls (Ontario); Dubai; and Singapore, as well as operations associated with licensing the use of certain of Hershey's trademarks and products to third parties around the world.

Sales and Marketing

Among its significant customers, wholesale distribution giant McLane Company accounts for 25% of Hershey's sales each year. It's the primary distributor of Hershey products to Wal-Mart. Hershey leverages a staff of full-time sales representatives and food brokers to peddle its products to customers. In general the confectionery company counts wholesale distributors, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, and department stores among its vast customer set. Hershey's distribution network ships its products from its manufacturing plants to strategically located distribution centers, using common carriers to deliver products from there to customers.

The company makes a point to launch new versions of old favorites, such as Jolly Rancher lollipops and bite-size bits of chocolate bars. Although chocolate bars take center stage, most recently premium dark varieties, it introduced sugar-free chocolate to tempt the growing number of diabetic and overweight consumers. Moving into the snack aisle, Hershey has rolled out cookies, 100-calorie treats, and granola bars.

Financial Performance

Hershey achieved historic growth in 2016, with revenues peaking at a record-setting $7.44 billion. The growth was driven by higher North America volumes, largely in products supported by increased high-profile promotional programming such as NCAA March Madness, the Summer Olympics, and NCAA Football College Game Day. It was also helped by new product launches for Snack Mix, Snack Bites, and Hershey's Cookie Layer Crunch bars.

After experiencing a drop in profits for 2015, Hershey posted profit growth of 40% in 2016. This was mainly due to a major decrease in the amount of impairment and realignment charges it paid compared to the previous year.

In addition, Hershey's operating cash flow has fluctuated wildly over the years, after spiking in 2015 to $1.21 billion, cash flow declined 19% to $983 million in 2016; this was attributed to unfavorable changes in working capital and additional prepaid expenses associated with higher payments on commodity futures contracts in 2016 as the market price of cocoa declined.

Strategy

Hershey's growth strategy includes expanding its snack foods business while continuing to invest in its core confectionery business. The chocolate maker is bolstering its snack food line up to capitalize on US consumers' growing appetite for healthier snacks. With consumers in the US snacking more than in years past, Hershey has begun offering more mixed snack options, including nut, pretzel, and chocolate mixes. The company plans to introduce additional snack categories and may pursue acquisitions of companies that produce protein-based and other types of snacks it hasn't traditionally offered. Hershey also continues to invest in its iconic brands, including Hershey's, Reese's, and Hershey's Kisses.

In order to compete with online competitors, Hershey in 2017 announced plans to significantly ramp up its e-commerce operations through potential collaborations with brick-and-mortar retailers and investing significantly more in its technological infrastructure.

In addition to its growth initiatives, the company is also cutting costs to improve profitably, particularly in international markets. In 2017, Hershey announced it was laying off about 15% of its global workforce. The employee reduction, intended to improve operating margins between 2017 and 2019, will affect about 2,700 mostly hourly workers outside of the US.

Mergers and Acquisitions

Hershey's strategic focus is on expanding its global presence as it jockeys for market share from rivals Mars and Kraft, which owns Cadbury. In 2016, the company acquired Ripple Brand Collective, LLC, a privately held company based in Congers, New York that owns the barkTHINS mass premium chocolate snacking brand for approximately $285 million. The acquisition was undertaken in order to broaden the company’s product offerings in the premium and portable snacking categories.

In 2015 Hershey picked up KRAVE Pure Foods, headquartered in Sonoma, California. KRAVE is a manufacturer of KRAVE jerky, an all-natural snack brand of premium jerky products. The transaction allowed Hershey to tap into the rapidly growing meat snacks category and further expand into the broader snacks space.

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Hershey Company

100 Crystal A Dr
Hershey, PA 17033-9524
Phone: 1 (717) 534-4200

Stats

  • Employer Type: Public
  • Stock Symbol: HSY
  • Stock Exchange: NYSE
  • President and CEO: Michele G. Buck
  • President and CEO: Michele G. Buck
  • SVP and CFO: Patricia A. Little
  • 2016 Employees: 17,980

Major Office Locations

  • Hershey, PA

Other Locations

  • Fresno, CA
  • Washington, DC
  • Kennesaw, GA
  • Deerfield, IL
  • Lisle, IL
  • Robinson, IL
  • Louisville, KY
  • Eden Prairie, MN
  • Kenly, NC
  • Raleigh, NC
  • New York, NY
  • Loveland, OH
  • Hazle Township, PA
  • Lancaster, PA
  • Lebanon, PA
  • Middletown, PA
  • Palmyra, PA
  • Memphis, TN
  • Stuarts Draft, VA
  • Winchester, VA
  • Abbotsford, Canada
  • Calgary, Canada
  • Dartmouth, Canada
  • Granby, Canada
  • Langley, Canada
  • Mississauga, Canada
  • Montréal, Canada
  • Saint-Hyacinthe, Canada
  • Saint-Laurent, Canada
  • Smiths Falls, Canada
  • Winnipeg, Canada
  • Shanghai, China
  • Bhopal, India
  • Chennai, India
  • Chittoor, India
  • Guwahati, India
  • Hyderabad, India
  • Kolkata, India
  • Mandideep, India
  • Mumbai, India
  • Raisen, India
  • Monterrey, Mexico
  • Makati, Philippines
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