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About Hershey Company

Hershey Company works to spread Almond Joy and lots of Kisses. With a portfolio of more than 80 global brands, the #1 chocolate producer in North America has built a big business making such well-known chocolate and candy brands as Hershey's Kisses, Reese's peanut butter cups, Twizzlers, Mounds and Almond Joy candy bars, York peppermint patties, and Kit Kat wafer bars. Hershey also makes grocery goods — including baking products, toppings, sundae syrup, cocoa mix, cookies, snack nuts, breath mints, and bubble gum — and has expanded into popcorn and other savory snacks. Products are sold to wholesale distributors and retailers throughout North America and exported overseas; the US accounts for most of sales.

Operations

Hershey's operations consist of two business segments, North America, which accounts for some 90% of revenue, and International and Other, about 10%.

The company makes and sells more than 80 brands led by Hershey's and Reese's, as well as Krackle, Kit Kat, Kisses, and York. Other popular brand franchises are Twizzlers, Mounds, York, Ice Breakers, Jolly Rancher, and Bubble Yum, which fall within the company's sweets and refreshment business unit. Through acquisitions, Hershey has added snack brands such as Skinny Pop popcorn and other "better-for-you" snacks and Krave jerky.

In international markets, the company adds regional brands such as Pelon Pelo Rico confectionery products (Mexico), IO-IO snack products (Brazil), and Maha Lacto confectionery products and Jumpin and Sofit beverage products (India).

Confectionery and confectionery-based products account for about 95% of total sales with the up-and-coming snacks portfolio generating the rest.

Geographic Reach

Hershey's North America segment accounts for some 90% of revenue (mostly from the US), and it caters to the traditional chocolate and non-chocolate confectionery market, as well as grocery and growing snacks markets, in the US and Canada.

International and Other (about 10% of revenue) include operations in China, Mexico, Brazil, India, and Malaysia, primarily for consumers in these regions. The segment also distributes and sells confectionery products in export markets within Asia, Latin America, Middle East, Europe, Africa and other regions and includes Hershey's Chocolate World stores in Hershey, Pennsylvania; New York; Las Vegas; Niagara Falls (Ontario); and Singapore. The US accounts for about 85% of revenue and other countries accounts for about 15% of revenue.

Its headquarters is located in Pennsylvania.

Sales and Marketing

Hershey leverages a staff of full-time sales representatives and food brokers to peddle its products to customers. In general, the confectionery company counts wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, and concessionaires among its vast customer set. Its distribution network ships products from its manufacturing plants to strategically located distribution centers, using common carriers to deliver products to customers.

Hershey is heavily reliant on its largest customer, McLane Co., the primary distributor of Hershey products to Walmart, which accounts for nearly 30% of total sales.

The company's advertising expenses totaled $513.3 million in 2019, $479.9 million in 2018, and $541.3 million in 2017, respectively

Financial Performance

Net sales increased 3% in 2019 to almost $8 billion compared with 2018, reflecting a favorable price realization of 2% due to higher prices on certain products, a 1% benefit from net acquisitions and divestitures (predominantly driven by the 2019 acquisition of ONE Brands and the 2018 acquisition of Pirate Brands, partially offset by 2018 divestitures) and a volume increase of less than 1%, partially offset by an unfavorable impact from foreign currency exchange rates of less than 1%. Excluding foreign currency, our 2019 net sales increased 3%. Consolidated volumes increased due to solid marketplace growth in select international markets.

Net income decreased $27.9 million to $1.1 billion, or 2%, in 2019 compared with 2018. The decrease in both net income and EPS-diluted was driven primarily by higher impairment charges and SM&A in 2019, partially offset by higher gross profit, lower business realignment costs and lower income taxes.

Cash at the end of 2019 was $493.3 million, a decrease of $94.7 million from the prior year. Cash from operations contributed to the coffers was $1.8 billion, while investing activities used $780.5 million, mainly for acquisitions. Financing activities used another $1.1 billion mainly for payments of short-term debt.

Strategy

The foundation of their marketing strategy is their strong brand equities, product innovation and the consistently superior quality of their products. Hershey devote considerable resources to the identification, development, testing, manufacturing and marketing of new products. The company utilize a variety of promotional programs directed towards their customers, as well as advertising and promotional programs for consumers of their products, to stimulate sales of certain products at various times throughout the year.

The company's strategy focuses on: maintaining undisputed lead in US confection and capturing incremental snacking occasions; driving profitable growth, allocating capital resources and optimizing cost structure; and expanding competitive advantage through differentiated capabilities.

Mergers and Acquisitions

In late 2019, in a move that bolsters its line of healthier snacks, the company completed the acquisition of nutrition bar maker One Brands for approximately $397 million. The purchase complements Hershey's existing Oatmega business, acquired as part of the 2018 acquisition of Amplify Snack Brands, and its investment in European protein-bar maker FULFIL Holdings.

Company Background

The Hershey Company is the legacy of Milton Hershey, of Pennsylvania Dutch origin. Apprenticed in 1872 at age 15 to a candy maker, Hershey started Lancaster Caramel Company at age 30. In 1893, at the Chicago Exposition, he saw a new chocolate-making machine, and in 1900 he sold the caramel operations for $1 million to start a chocolate factory. Chocolate proved to be a wise decision as the company made the name Hershey synonymous with American chocolate over the century.

Hershey Company

19 E Chocolate Ave
Hershey, PA 17033-1314
Phone: 1 (717) 534-4200

Firm Stats

Employer Type: Publicly Owned
Stock Symbol: HSY
Stock Exchange: , NYSE
Chairman: John P. Bilbrey
President and CEO: Michele G. Buck
SVP and CFO: Patricia A. Little
Employees (This Location): 500
Employees (All Locations): 16,140

Major Office Locations

Hershey, PA

Other Locations

Fresno, CA
Kennesaw, GA
Deerfield, IL
Lisle, IL
Robinson, IL
Louisville, KY
Eden Prairie, MN
Kenly, NC
Raleigh, NC
New York, NY
Loveland, OH
Hazle Township, PA
Hershey, PA
Lancaster, PA
Lebanon, PA
Middletown, PA
Palmyra, PA
York, PA
Memphis, TN
Stuarts Draft, VA
Winchester, VA
Shanghai, China
Bhopal, India
Chennai, India
Chittoor, India
Guwahati, India
Hyderabad, India
Kolkata, India
Mandideep, India
Mumbai, India
Raisen, India
Abbotsford, Canada
Calgary, Canada
Dartmouth, Canada
Granby, Canada
Langley, Canada
Mississauga, Canada
Montréal, Canada
Saint-Hyacinthe, Canada
Saint-Laurent, Canada
Smiths Falls, Canada
Winnipeg, Canada