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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. Beyond candy, Hershey’s has expanded into the snacks category. 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, 90% of revenue, and International and Other, 10% of revenue. The company makes and sells more than 80 name brands led by Hershey's and Reese's, as well as Krackle, Kit Kat, and York. Other popular brand franchises are Twizzlers, Mounds, York, Ice Breakers, and Bubble Yum, which fall within the company's sweets and refreshment business unit. Through acquisitions, Hershey has added snack brands such as Skinny Pop popcorn and other "better-for-you" snacks and Krave meat snacks (jerky).

Geographic Reach

Hershey’s North America segment accounts for 90% of revenue, and it caters to the traditional chocolate and non-chocolate confectionery market, as well as grocery and growing snacks markets, in the US and Canada.

International and Other (10% of revenue) 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; 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

Two customers account for 40% of Hershey's sales. The biggest is McLane Co., 30% of revenue, the primary distributor of Hershey products to Walmart, while Target supplies another 10% of Hershey's sales.

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 grocery stores, mass merchandiser, 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-sized chocolate bars. Although chocolate bars take center stage, it offers 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’s revenue has trended steadily higher over the past 10 years except for a slip in sales in 2015. Sales rose about 5% a year over the decade.

The rate slowed to 1% 2017 when sales totaled $7.5 billion from 2016 sales. The company benefited from favorable currency exchange rates and from new products such as Hershey's Cookie Layer Crunch, Hershey's Gold, and Hershey's and Reese's Popped Snack Mix and Chocolate Dipped Pretzels.

Net income reached $783 million in 2017, a 9% increase from 2016 due to lower costs in 2017.

Hershey added about $83 million to its cash holdings to reach $380 million in 2017. Its operations generated $1.2 billion while investing and financing activities used $328.6 million and $843 million, respectively.

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 might 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.

To compete with online sweets and snacks purveyors, Hershey in 2017 announced plans to significantly ramp up its e-commerce operations through potential collaborations with brick-and-mortar retailers and invest more money in its technology 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 would lay off about 15% of its global workforce. The employee reduction, intended to improve operating margins between 2017 and 2019, affected 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 to capture market share from rivals Mars and Kraft, which owns Cadbury.

In early 2018, Hershey acquired Amplify Snack Brands, a high-growth snack food company that makes SkinnyPop, its market leading healthy popcorn brand. The transaction was valued at $1.6 billion and helped Hershey develop a broader portfolio of consumer snacking brands, especially as they pertain to "better-for-you" products that feature clean, simple, and transparent ingredients. Later that year it announced plans to buy Pirate Brands from B&G Foods for $420 million. Pirate Brands includes Pirate's Booty cheese puffs, along with the Smart Puffs and Original Tings brands.

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 made to broaden the company’s product offerings in the premium and portable snacking categories.

Company Background

The Hershey Company is the legacy of Milton Hershey, of Pennsylvania Dutch origin. Apprenticed in 1872 at age 15 to a candy maker, Hershey started Lancaster Caramel Company at age 30. In 1893, at the Chicago Exposition, he saw a new chocolate-making machine, and in 1900 he sold the caramel operations for $1 million to start a chocolate factory. Chocolate proved to be a wise decision as the company made the name Hershey synonymous with American chocolate over the century.

Hershey Company

19 E CHOCOLATE AVE
Hershey, PA 17033-1314
Phone: 1 (717) 534-4200

Stats

Employer Type: Publicly Owned
Stock Symbol: HSY
Stock Exchange: , NYSE
Chairman: John P. Bilbrey
President and CEO: Michele G. Buck
SVP and CFO: Patricia A. Little
Employees (This Location): 500
Employees (All Locations): 16,420

Major Office Locations

Hershey, PA

Other Locations

Fresno, CA
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
Hershey, PA
Lancaster, PA
Lebanon, PA
Middletown, PA
Palmyra, PA
York, PA
Memphis, TN
Stuarts Draft, VA
Winchester, VA
Shanghai, China
Bhopal, India
Chennai, India
Chittoor, India
Guwahati, India
Hyderabad, India
Kolkata, India
Mandideep, India
Mumbai, India
Raisen, India
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