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Snacks & Candy

Hershey Shines in Candy, Mint, Gum and Snack Sales

New packaging drives stronger shelf presence: exec

HERSHEY, Pa. -- Sweet and salty treats were a high point for The Hershey Co. in 2017. In fact, the company’s CMG (candy, mint, gum) and snacks category sales increased 1.7%, according to its year-end financial report. President and CEO Michele Buck attributes this growth to Hershey’s strong market share in the CMG category.

“[The market share] puts us in an enviable position, as it provides us with financial flexibility to invest in the business, expand margins and hold a leadership role with major retail customers,” she said on the company’s fourth-quarter earnings call on Feb. 1. “Reese's, Hershey's, Kit Kat and Kisses continue to drive growth, and the combined retail takeaway on these power brands in Q4 and for the full year increased about 2% and 5%, respectively, with market share of these combined brands up in both periods.”

Moving forward, Hershey expects its 2018 net sales to increase between 5% and 7%, and organic net sales to grow 2% from 2016. Patricia Little, the company’s senior vice president and CFO, said this growth will result from the recent acquisition of Austin, Texas-based snacking company Amplify, among other factors. She also said the transition from lay-down bags to stand-up pouches for all individually wrapped chocolates, an initiative launched in June 2017, is progressing and will expand this year.

“This initiative enables product to get on the shelf quicker with less in-store labor and improved shopability in the aisle,” she said. “While these packaging initiatives have an impact on gross margin in 2018, we believe this is the right long-term investment for our brand and business as it should result in improved shelf presence and visibility.”

Despite the surge in CMG sales and acquisitions, the latter stretch of 2017 fell under par for Hershey in total net sales, which saw a 1.6% decline in its fourth quarter. Consolidated net sales were $1.94 billion in fourth-quarter 2017 vs. $1.97 billion in fourth-quarter 2016. Moreover, Hershey’s fourth-quarter North American net sales declined 0.9% vs. the same period in 2016. The decline was partially due to the timing of shipments as well as tough competition, Little said.

Nonetheless, 2017 was still a positive year for the Hershey, Pa.-based company. Its full-year net sales increased 1%, partially from new acquisitions, the report said. Consolidated net sales were $7.52 billion in fourth-quarter 2017 vs. $7.44 billion in fourth-quarter 2016. Over the 12 months, total Hershey U.S. retail takeaway increased 1.2% and aligned with its U.S. net sales.

Hershey has more than 80 brands that drive more than $7.4 billion in annual revenues, including Hershey's, Reese's, Hershey's Kisses, Jolly Rancher, Ice Breakers and Brookside.

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