Shrewd Chocolateering From Hershey’sJanuary 28, 2014 - by Kory Grushka
Not sure whats going on at Hershey’s, but it seems that they are constantly in the news these days with innovative and cutting edge new business initiatives. Seems to us that the company has taken a more aggressive position on investing in growth, and it also seems that this change has been a huge success. It has not only increased the company’s sales (which it has), but more importantly its market share and brand value. Below is a look at an interesting case study in building a brand – a ubiquitous legacy brand – courtesy of Hershey’s.
In a recent article from Adage, we were surprised to learn that Hershey’s did not launch its first national ad campaign until 1970. And even then, Hershey’s has historically been fairly conservative with its ad spend. In recents years, however, that trend has started to change. Since 2006, the company has increased its ad budget from a little over $100 million to almost $600 million per year. This sea change in strategy has not only affected signature brands like Reese’s, but it has also served to support many of its smaller niche brands like Rolo, and more recently, Take 5.
Leading with Technology
As you may have seen, Hershey’s recently announced a partnership with 3D Systems, a leading 3D printing company that also happens to produce 3D printers that can print objects out of food (including chocolate). With this arrangement, Hershey’s has not only identified one of the fastest growing technologies in the world, but it has also become a pioneer in bringing this technology to the whole food industry. Most people dont think about 3D printing as a food manufacturing process, but that is a very real application for this technology. It has the potential to disrupt the existing supply chain for food manufacturing, while at the same creating dramatic new revenue streams for food companies that partner with 3D printer manufacturers (or become 3D printer manufacturers).
Whether selling branded 3D food printers, raw materials, components, food products, or other accessories that are beyond our imagination, the potential opportunities for food manufacturers are astounding. And it speaks volumes that Hershey’s was among the first – if not the first – to act in that space. As outsiders, hard to imagine that Mars is not negotiating a deal with Stratasys or ExOne as we write this.
Strategy & Innovation
In the realm of product development and innovation, Hershey’s has introduced a number of successful new product launches around the globe, while demonstrating great vision and timely execution. For instance, in the U.S., the company has seen success with various new and creative line extensions such as Reese’s Minis, Hershey’s Drops and Rolo Minis. Moreover, a few weeks ago Hershey’s announced that it will extend its brand into the world of chocolate spreads. Not certain whether this will be an outsized hit for the company, but it just makes so much sense to use the Hershey’s brand as a springboard into the chocolate spread category (not coincidentally the fastest growing category in the U.S. spreads market).
All that said, perhaps the most interesting part of the Hershey’s story is its laser-like focus on international growth, and particularly the Chinese market. The company has made clear that China is at the top of its priority list. Accordingly, it sports a fulsome product pipeline in that country, with Hershey’s Kisses, solid chocolate globes, and more recently a new line of soft caramels that will soon be finding their way into the U.S. market.