Headquartered in Hershey, Pennsylvania, Hershey Company is the largest chocolate producer in North America and a confectionary leader worldwide, with over 80 brands, annual revenues over $7 billion, about 20,000 employees, and operations in about 80 countries. Hershey offers chocolates as well as other candies, mints, and chewing gum. Notable products include Hershey Kisses, Mr. Goodbar, Twizzlers, Jolly Ranchers, Ice Breakers, and, what may be the best-selling candy bar on the planet—Reese’s, a Hershey brand that recently became an official sponsor of ESPN college football game day. Hershey is currently expanding globally with strategic emphasis on markets in China and Mexico, but the company still derives more than 85 percent of its revenue from the United States. In 2015, Hershey introduced the following new products: Kit Kat White Minis, Hershey’s Caramels, Ice Breakers Cool Blast Chews, Reese’s Spreads Snacksters, and Graham Dippers.
Hershey’s net income for the first quarter (Q1) of 2015 declined 3.1 percent to $244 million from Q4 of 2014. Hershey’s Q1 2015 revenues in China declined 47 percent. In response to this downturn, Hershey shifted its strategy in China to combat slower consumer spending by focusing on smaller rather than the largest cities, increasing its e-commerce offerings, and decreasing its reliance on hypermarkets. Also for Q1 of 2015, Hershey’s advertising expenses increased 8 percent, but its selling and marketing expenses increased about 15 percent. Analysts have turned pessimistic about Hershey meeting its 20 percent sales growth guidance in China for calendar year 2015. The company’s sales rose 3.5 percent to $1.94 billion for Q1 of 2015. Hershey has retail stores in New York City, Chicago, Niagara Falls, Shanghai, Dubai, Singapore, and Hershey (PA).
Copyright by Fred David Books LLC. (Written by Forest R. David and Meredith E. David)
In 1894, Milton Hershey of Lancaster, Pennsylvania, decided to coat his popular caramels with a sweet chocolate. This venture was actually Mr. Hershey’s third attempt in the confectionary business. In a 1927 interview, Mr. Hershey shared some advice from his mother that he attributed to his success: “When you tackle a job, stick to it until you have won the battle.” Mr. Hershey was never an advocate of heavy advertising, instead telling anyone who would listen that providing a quality product is the best advertising in the world. A personal motto in Mr. Hershey’s office read “Business is a matter of human service.”
By 1900, Hershey was producing chocolate not only for caramel coatings but also in bars and other shapes, including the world famous Hershey’s Kiss in 1907. A defining feature of Hershey from early on was its assembly line systems that lowered the unit cost of chocolate to a level that most everyone could afford. The 1950s through 1980s saw great growth for Hershey from acquisitions. Most notably was the 1956 acquisition of Reese Candy Company, which produced the world-famous Reese Peanut Butter Cups that had always used Hershey’s chocolate to coat its peanut butter cups. After formally changing its name to Hershey Foods Corporation in 1968, Hershey acquired marketing rights to the English firm Rowntree Mackintosh; Y&S Candies, famous for Twizzlers; and Peter Paul/Cadbury’s USA confectionery operations. Peter Paul’s most notable products include Almond Joy and Mounds Bars. In 2012, according to Advertising Age and Euromonitor International, the Hershey’s Reese’s brand was the No. 1-ranked candy in America, with annual sales of $2.6 billion. Globally, Reese’s stood at No. 4.
Hershey’s net sales for the fourth quarter of 2014 totaled $2.01 billion, but fell short of the $2.07 billion estimated by analysts. That was the sixth quarter over the past two years that Hershey’s sales underperformed. However, the company’s sales were higher than the prior year, partly due to Hershey acquiring the Shanghai Golden Monkey based in China. Acquiring the firm in China more than doubled Hershey’s revenue derived from that country. On December 30, 2014, Hershey entered into an agreement to divest its Mauna Loa macadamia nut business, $68 million annually, to Hawaiian Host, Inc.
In early 2015, Hershey acquired KRAVE Pure Foods, Inc. for about $300 million. KRAVE is a maker of beef jerky and other high-protein snacks. Hershey made the move reportedly to tap rising interest in meat snacks, and to further the company’s reach in making foods that consumers want to snack on. Hershey says the estimated $2.5 billion U.S. meat snacks category is growing at a double-digit pace. Founded in 2009, KRAVE generated about $35 million in sales in 2014. Hershey plans to operate KRAVE as a stand-alone business within its Hershey North America division; KRAVE’s founder, Jon Sebastiani, continues to lead the business as President of KRAVE.
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