Hershey's Game Plan
Consumer insights, iconic brands, international expansion fuel confectioner's growth engine
HERSHEY, Pa. -- Maybe she is Rachel, a busy mom on the go, or Joe, a blue-collar construction worker. For The Hershey Co., understanding the core candy consumer and delivering innovative products that meet his or her needs is its key to disciplined, sustainable growth.
As Hershey's Michele Buck explained to representatives of the trade press at a media event last week, "We are not a scale player, but the key is superior insights" to win at delivering consumer and shopper solutions.
Buck and other company executives shared Hershey's growth strategy at its Global Customer Insights Center, a retail laboratory where the manufacturer and its retailer partners collaborate on how to better meet consumer needs. It also was a fitting backdrop to share the company's global ambitions and plans for further growing its iconic chocolate and nonchocolate brands.
Buck, who became president of Hershey's North America business in April, outlined the key strategies that will help take the company from $6.6 billion in 2012 sales to $10 billion in 2017. They include delivering predictable growth in North America, which still has potential despite being a mature market. This will in turn fuel Hershey's expansion into emerging markets that are enjoying high GDP growth and an expanding middle class who can now afford discretionary purchases.
First up: China. Today, 10% of Hershey's sales come from outside of North America. The goal is to push this share to 25% by 2017.
To reach its goals at home and abroad, Hershey is leveraging its iconic brands, sharing proprietary consumer insights and analytic tools with its retail partners, and embracing its ability to guide retail execution of programs and promotions with its direct sales force.
Executives gave examples of how this strategy will get executed. Chuck Raup, vice president of U.S. Sweets & Refreshment, discussed Hershey's investment in its core nonchocolate brands--Twizzlers, Jolly Rancher, Breath Savers and Ice Breakers--through advertising and merchandising, growing their usage occasions and evolving the product lines to meet new consumer needs.
For example, Hershey developed Jolly Rancher Bites as a soft and chewy version of the famous Jolly Rancher hard candy, extending the brand from what was a limited-frequency usage, intense fruit flavor experience to one that serves the snacking need state. This also includes an evolution in packaging, with a new king-size stand up pouch that fits into a car cup holder.
Hershey is also focusing on sweets merchandising, emphasizing the right mix, vehicle and products to drive trial inside stores, as well as special promotions. On the innovation front, stay tuned for what will be Hershey's first global new brand, debuting at the 2013 NACS Show in Atlanta.
Jenn Podhasky, vice president of U.S. chocolate, emphasized the need to connect consumers with Hershey's core brands. The company's May 2013 launch of Kit Kat Minis has helped build its share of hand-to-mouth candy sales to nearly 25%, according to Nielsen figures.
Meanwhile, Hershey's Brookside line of chocolate-covered superfruits has grown to be the No. 5 dark-chocolate candy brand. While the brand has had limited presence in convenience stores, Hershey plans to change that with new "impulse packs" that will better meet the immediate-consumption occasion.
The company will continue to emphasize seasonal with solution-based merchandising in all channels.
And despite the emphasis on core brands, Hershey will continue to push the potential of its entire portfolio. First up: Nutrageous and Hershey Miniatures, which are undergoing a packaging refresh and advertising push to "reactivate" the brands.