HERSHEY, Pa. – The Hershey Co. totaled about $2 billion in net sales during last year’s fourth quarter, a 2.5% increase from the same quarter in 2017. Overall, the chocolate company’s 2018 net sales grew 3.7% compared to 2017, said Patricia Little, CFO of Hershey, during the company’s fourth-quarter earnings call Jan. 31.
The growth was led by new brand positioning and marketing campaigns for Hershey's confection business, especially for the Reese’s and Hershey’s brands, said Michele Buck, CEO of the Hershey, Pa.-based company.
“In a dynamic and highly competitive operating environment, in 2018, we grew our business and delivered on our financial commitment, while strategically investing for the future,” she said. “We shifted investment to new marketing capabilities that enable us to support more confection brands within our portfolio.”
Here are four insights from Hershey’s fourth-quarter 2018 …
Amplify keeps growing
Hershey continues to reap the rewards of its acquisition of Amplify Snack Brands. SkinnyPop and Pirate’s Booty—the latter of which was added to Amplify’s portfolio in October—increased 9% and 5% during the company’s fourth quarter, respectively. Overall, Hershey’s better-for-you snack segment is projected to grow by mid-single digits in 2019 due to increased household penetration, Buck said.
“These two high-growth, high-margin, better-for-you snacking assets are a great fit with our Hershey portfolio,” Buck said. “They're performing well in the marketplace and they're on track to deliver against our goals.”
Strong holiday sales
Hershey’s recent Halloween and Christmas promotions sparked a 1% increase for its candy, mint and gum (CMG) category. Hot Cocoa Kisses, one of the Christmas launches, was the top-selling new holiday item and drove merchandising support and growth for the entire Kisses lineup, Buck said.
Along with Hot Cocoa Kisses, Hershey debuted Reese’s Trees Stuffed With Pieces during Christmas, and it launched five new items for Halloween: Glow in the Dark Snack Wrappers, Spooky Foils, Kit Kat Dark Chocolate Snack Size, Twizzlers Pull‘n’Peel Snack Size and a Halloween Assortment Pumpkin Bowl.
Reese's sparks chocolate growth
Sales of Reese’s increased 4% in last year’s fourth quarter, which helped increase profits for Hershey’s entire chocolate segment by 1.9% during that time frame. Buck credits this growth to Hershey’s NotSorry campaign, a promotion meant to encourage consumers to indulge in Reese’s guilt-free.
Profits for Hershey’s York, Almond Joy, Mounds and Payday chocolate brands also grew a combined 2%—a 7% increase compared to 2017. “[This growth] was driven by velocity,” Buck said. “We leveraged a new, more efficient marketing model to support these brands and believe there is additional opportunity to bring more of our smaller but highly differentiated products to light in 2019 with this approach.”
Ice Breakers gains momentum
Despite the 1% growth in the CMG sector, Hershey’s Ice Breaker gum brand surged more than 9% during last year’s fourth quarter. Overall, the company’s gum division increased 18% during this time frame due to distribution and velocity gains, Buck said.
“We expect to see similar momentum in 2019 as we continue partnering with our retailers on differentiated offerings that meet our customer's needs,” Buck said.