Hershey Company and Chocolate Industry Situation and Challenges
Company Information
Take 5 was a chocolate bar that first produced by the Hershey Company in the 2004. It consisted of 5 components: pretzel, caramel, peanut butter, peanuts, and a chocolate coating. The Hershey Company was found by Milton S. Hershey in 1894. Its headquarters are in Hershey, Pennsylvania. Now Hershey is the largest chocolate producer in North America and a leader of chocolate industry in the world. It operates in 50 countries and employs more than 14,000 people worldwide. In 2013, Hershey’s total company revenue is about $7.0 billion, majority of that in domestic market about $4.7 billion. (Hester Jeon, 2013) Chocolate business unit and the sweets and refreshment business are the Hershey's two primary business units. Hershey owns more than 80 famous brand names including Hershey's chocolate bars, Hershey's Kisses, Reese's, Kit Kat, Twizzlers and so on. In last 5 years, the company is focused on expand its international markets share in different countries like China and Mexico while maintaining its markets share in North America.
Industry Information
In the chocolate industry the companies produce and retail chocolate products and confectioneries by using cacao beans, sugar and other materials. The Hershey Company, Nestle SA, Mars Inc. are the major players in America chocolate industry. Hershey Company’s market share is 30.5%, Mars Inc is 24.2%, Nestle SA is 10.1%. In 2013, America chocolate industry revenue is $15.5 billion and profit is $2.1 billion. In the past 5years the average annual growth is about 1.5% (Exhibits 1). Because of lower per capita disposable income in 2008, the consumers turned to buy cheaper candy and chocolate. The sales vol...
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.... In 2008, the world price of cocoa increased 31.4%, in 2010 it increased another 17.9% in 2010. The other raw material, sugar’s price increased 44.3% in 2010. (Hester Jeon, 2013) Therefore, a significant spiking in the price of raw materials adversely affects profit of the whole chocolate industry. The Mars Inc has a plan to invest in cocoa planting’s research and development. The company wants to help the cocoa farmers increase their yields and efficiency. Consequently, the could reduce and control the price of cacao beans.
Growing health consciousness
More and more Americans have realized that consuming to much sugar and fat is harmful to their health. This concern would reduce the sales of traditional chocolate product. Chocolate manufacturer actively research and develop new healthier and more nutritious chocolate like free-sugar, low-sugar and dark chocolate.
While Europe and the United States account for most chocolate consumption, the confection is growing in popularity in Asia and market forecasts are optimistic about the prospects in China and India (Nieburg, 2013, para 9). According to the CNN Freedom Project, the chocolate industry rakes in $83 billion a year, surpassing the Gross Domestic Product of over a hundred nations (“Who consumes the most chocolate,” 2012, para 3). If chocolate continues grow popular in Asia, it stands to become even more lucrative.
The Hershey Company is the largest manufacture of chocolate and candy in the United States. The Hershey Company produces and sells a wide variety of sweets, including gluten-free and sugar-free sweets (The Hershey Company). Some famous brands produce by The Hershey Company include, Hershey, Reese’s, York, Kit-Kat, Ice Breakers, Twizzlers, Almond Joy, and Mounds (The Hershey Company). Milton Hershey changed the candy making industry by turning his caramel business into a chocolate industry, caring enough to influence his company to help organizations and individuals, and by remaining successful for over a hundred years.
The videos provided for this subject builds a great understanding on what happens behind the scenes and how the production cycle of chocolates turns deadly for few. The chocolate industry is being accused having legit involvement in human trafficking. The dark side of chocolate is all about big industries getting their coco from South America and Africa industries. However, it is an indirect involvement of Hersheys and all other gigantic brands in trafficking (Child Slavery and the Chocolate Factory, 2007).
Market research and information about the industry is very important to the organization because it will allow the organization to position itself well in terms of sourcing chocolate raw materials and in identifying the market for its products. For example, understanding that some chocolate product purchases are seasonal, e.g., at Christmas; around Mother’s Day; and, on Valentine’s Day, allows the organization to have more product on hand and to create displays, in store, that will increase purchases and attract more customers when existing customers tell their friends about the availability of high end products, at reasonable prices, in their store.
Today, Hershey owns or has made over eighteen different candies besides the Kiss, which include: Almond Joy, Cadbury Creme Eggs candy, Hershey 's Cookies 'n ' Creme candy bar, Hershey 's milk chocolate, Mounds candy bars, Hershey 's Nuggets chocolates, Hershey 's Hugs chocolates, Reese 's crunchy cookie cups, Reese 's Nut Rageous candy bar, Reese 's Peanut Butter Cups, Hershey Air Delight, Sweet Escapes candy bars, TasteTations candy, Twizzlers candy, Kit-Kat wafer bar, Whoppers malted milk balls, and York Peppermint Patties. All these candies have made Hershey’s a multimillion company (Bellis,
Cadbury must be able to create or revise a marketing mix that would keep a strong stand in the market against the big competition from Nestle and Hershey who both have very successful campaigns for their chocolate products.
Sainsbury’s entered a joint venture with British Home Stores in 1971 to create hypermarket style stores under the brand SavaCentre. These stores reverted to the standard Sainsbury’s brand and superstore format in 1999.
The recent product, liquor filled chocolates is a viable business that can sell if it is implemented professionally. This recent innovation should be able to acquire attention from the market owing to its combination of selling products. Put simply, the liquor-filled chocolates are chocolates that contain alcohol. According to Novellino (2011), Chocolate-candy sales summed up to $16 billion in 2008 in the U.S. Furthermore, the statistics on alcohol reveals that liquor sales hit $19.9 billion in 2011. What does the statistics reveal about the product? This reveals that the market for the two products is present and combining them will result in a profitable business. This paper is a report on targeting and segmenting the new liquor filled chocolates as a potential business.
Hershey’s takes advantage of many different types of advertising. Television commercials and ads are very common. Sponsorships is also another very common way Hershey advertises. Hershey sponsors everything from ice skating shows, to racecars. The Hershey Food Corporation is very competitive so they need this type of advertising. However, the only other major corporation to compete with is Mars. The chocolate industry is diffidently not pure competition. Mars and Hershey’s form an oligopoly. Hershey’s has so many different kind of products that they have a lot of competition. The company has branched out to where they’re not only competing against other chocolates but also for fruit candies, and baking chocolate and chocolate drinks as well. The fact that so many products are offered, extends the corporation to different divisions. Mexico and Canada have manufacturing plants. Seventeen manufacturing plants include Hershey, Pa (Hershey plant, Reese plant, West Hershey plant0, Hazleton, PA, Lancaster, PA, Memphis, Tenn., Naugatuck, Conn., New Brunswick, NJ, Oakedale, CA, Palmyra, PA, Reading, PA, Robinson, Ill., Stuarts Draft, VA, Wheatridge, CO, Dartmouth, Nova Scotia, Montreal, Quebec, Smiths Falls, Ontario, and Guadalajara, Mexico.
Although not an essential purchase, confectionery is bought by the majority of the population. Changing eating habits have led to increased levels of snacking and grazing and, as a highly accessible and desirable food, confectionery has been able to capitalise on this trend. There are two main sectors in the market — chocolate confectionery and sugar confectionery. The UK market is relatively mature.
The aim of this report is to present and critically estimate the market strategies of an international and a local chocolate manufacturer in Austria. The analysis is carried out in three stages – macro-environment (PEST analysis), micro-environment (Porter’s Five Forces Model) and company comparison (SWOT analysis). In the end, recommendations are given for the local brand Wiener Schokolade König.
Nestlé S.a. Is a Swiss multinational healthful and wellbeing related shopper Goods Company, headquartered in Vevey, Switzerland. It is the biggest nourishment organization in the world measured by incomes. Nestlé's items incorporate infant sustenance, packaged water, breakfast cereals, coffee, candy store, dairy items, dessert, pet sustenance’s and snacks. Nestlé utilize around 330,000 individuals in excess of 150 nations and have 461 manufacturing plants or operations in 86 countries nestle deals for 2011 were practically CHF 83.7 bill. It’s one of the principal shareholders of L’Oreal, the world's biggest beautifier’s organization. Nestlé history starts in 1866; when the first European dense milk processing plant was opened in Cham, Switzerland, by the Anglo-Swiss Condensed Milk Company. In Vevey, Switzerland, Nestlé originator by Henri Nestlé, germane drug specialist, propelled his Farinelactee, a mix of dairy animals' milk, wheat flour and sugar, sparing the life of a neighbor's youngest. In 1905, The Anglo-Swiss Condensed Milk Company, established by Americans Charles and George Page, consolidated with Nestlé after several decades as fierce competitors to structure the Nestlé and Anglo-Swiss Milk Company.
Chocolate is the largest part of the $34.5 billion US confectionary industry. Confectionary products can be roughly described as “candy” or “sweets” - so inclusive
This means that each party can make choices. However in chocolate manufacturing one of the parties is often a large multi million dollar corporation and the other is a small farming company. Concern about the impact of this on small primary producers in developing countries lead to the Fairtrade agreement which Cadburys is a part of. By signing up to the Fairtrade agreement Cadburys agree to buy cocoa at a certain value. Last year Cadburys sold over 7 million chocolate products made with Fair Trade cocoa and this supported 65,000 jobs in
Therefore, the way the producers get the cocoa to the market is by after the beans are dried and packed into sacks, the farmer sells to a buying station or local agent. The buyer then transports the bags to an exporting company. The exporting company inspects the cocoa and places it into plastic bags. The cocoa is trucked to the exporter’s