HERSHEY, Pa. -- The Hershey Co. will cut SKUs of its candy products as a way of saving money, the company said.
During a company earnings conference call, President and CEO Michele Buck said factors such as increased delivery costs and cocoa prices have made it difficult for Hershey to produce and distribute its candy brands and holiday varieties across the country.
Buck said April 26 that she believes this packaging review and subsequent shelf transformation will drive profitable growth not only for the company but also for its retailers.
“This effort is in line with our goal to reduce U.S. business complexity and cost,” Buck said. “We think there is great opportunity to capitalize on our ongoing organization work to reduce complexity and enhance margins by providing an even higher level of service and product assortment to our customers.”
Company representatives also said during the call that Hershey could even eliminate its various holiday products made specifically for retailers and instead distribute a smaller number of them nationwide. No specific brands to be cut were named.
"There can be excess items that are not driving incremental, profitable growth," Buck said. "We just have to get after those."
Although Hershey foresees the initiative hindering sales in this year’s second half, it also expects annual sales to rise by about 5%, down from a previous projection of up to 7%.
The SKU cuts follow a positive year for Hershey’s candy category. In 2017, the company’s candy, mint, gum and snacks sales rose 1.7%, according to its year-end financial report. Specifically, the combined retail takeaway from products such as Reese's, Kit Kat and Kisses grew about 2% and 5% in the fourth quarter and the full year, respectively.
Hershey, Pa.-based Hershey makes chocolate, sweets, mints and other snacks including Reese's, Hershey's Kisses, Jolly Rancher, Ice Breakers and Brookside. The company expanded its range of products last year after acquiring snacking brand Amplify for $1.6 billion.