King Size Wears C-Store Crown

Up 18%, on pace to be $1.1 billion business in convenience channel, says Hershey's

HERSHEY, Pa. -- Driven by the king-sized candy bar and in-store merchandising, mint and gum (CMG) category was up 6.5% in convenience stores for The Hershey Co. in its third-quarter 2011, president and CEO John P. Bilbrey said late last week during the company's quarterly conference call.

"Within the c-store channel, the king-sized candy bar has emerged with the fastest growing pack type. Year-to-date, king size is up about 18% … and on pace to be a $1.1 billion business in convenience stores by year end. Here, Hershey is the king-size leader with a 54% share of the segment," he said.

In terms of Hershey's marketplace performance, total CMG retail consumer takeaway for the 12 weeks ending October 8 and year-to-date periods accounted for more 80% of Hershey's retail business and was up 8.7% and 8.3%, respectively, in the food, drug, mass, Walmart and c-store channels, he said.

Hershey's c-store takeaway increased for the 13th consecutive quarter and was up 12.8%. In the third quarter, Hershey's c-store chocolate, nonchocolate and mint takeaway was up 13%, 15.4% and 13.8%, respectively.

In 2011, Hershey's c-store king-size retail takeaway has increased 22% with market share up 1.6 points. "As it relates to our March pricing action, king-size conversion has progressed nicely due to merchandising, continued distribution gains, innovation and consumer recognition that this is a good price value proposition," said Bilbrey.

The take-home and the consumable king-size pack type is still doing well in the marketplace, he said. "We were particularly pleased with the Reese's Minis king-size where dollar velocity ranked second among all king-size offerings in c-stores and sixth in [food, drug and mass]."

He added that in the fourth quarter, the company will focus on c-store distribution and a high-value coupon program to build awareness and trial of the new Hershey's Air Delight, which it launched in the summer, with on-air advertising commencing in September. "While we're very excited about this launch, it's important to remember that Air Delight is a new and unique form and texture for U.S. consumers and will require brand building efforts," he said.

Reese's Minis and Hershey's Drops have been in the market for a little less than a year, and Bilbrey called them "an overwhelming success. Both products have exceeded our expectations, and we'll support them with strong year-two advertising … and strong merchandising support. This investment will ensure the brands continue to grow in 2012 and beyond."

And in the fourth quarter and into 2012, Hershey will launch some close-end line extensions that will bring "variety and excitement" to some existing brands including Hershey's Drops, Cookies 'n' Cream at a king-size pack price, Hershey's Pieces Milk Chocolate with Almonds and Jolly Rancher Crunch 'N Chew.

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