Hershey Co (HSY)

History and Background

The Hershey Company was founded by Milton Hershey in 1894 as the Hershey Chocolate Company, a subsidiary of his Lancaster Caramel Company. Hershey's aim was to produce affordable milk chocolate. It has since grown to become a global leader in chocolate and confectionery.

Core Business Areas

• North America Confectionery: This segment encompasses the production, marketing, and sale of chocolate and confectionery products in the United States and Canada.
• International: This segment focuses on growing Hersheyu2019s brands and offerings outside of North America, especially in high-growth areas such as Mexico, Brazil, India, and China.
• Snacks: This segment, while smaller, includes salty snacks such as Dot's Pretzels, and SkinnyPop popcorn, which Hershey is continuing to grow.

Leadership and Structure

Michele Buck serves as Chairman, President, and Chief Executive Officer. The company has a board of directors and operates with a structured executive leadership team across its various business segments and functional areas.

Key Offerings

• Hershey's Kisses: Iconic milk chocolate treats. Hersheyu2019s has the largest market share in the chocolate candy market at 31.4% in 2023. The competitors for this product include Mars' Dove chocolates and Lindt Lindor truffles.
• Revenue: 2.7
• Reese's Peanut Butter Cups: A popular combination of peanut butter and chocolate. Reese's leads the peanut butter candy market, holding over 50% of the market share. Major competitors include Justin's Peanut Butter Cups (owned by Hormel) and Russell Stover.
• Revenue: 2.3
• Hershey's Milk Chocolate Bar: A classic milk chocolate bar. Competitors include Mars' milk chocolate bars like Snickers and Milky Way, and Nestle's milk chocolate products.
• Revenue: 1.9
• SkinnyPop Popcorn: Ready-to-eat popcorn acquired by Hershey in 2019. Competitors include Smartfood, Angie's BOOMCHICKAPOP, and Pop Secret Ready-to-Eat Popcorn.
• Dot's Homestyle Pretzels: Crunchy pretzels with a unique seasoning. Acquired in 2021, competing with brands like Rold Gold, Snyder's of Hanover, and Utz.

Industry Overview

The confectionery and snacking industry is competitive and driven by consumer preferences, innovation, and economic conditions. Trends include healthier options, premium chocolates, and convenient packaging. Inflation and supply chain challenges have recently impacted the industry.

Positioning

Hershey holds a strong position in the North American confectionery market, particularly in chocolate. Its competitive advantages include its iconic brands, extensive distribution network, and marketing prowess.

Total Addressable Market (TAM)

The global confectionery market is projected to reach over $270 billion by 2028. Hershey is positioned to capture a significant portion of this market through innovation, international expansion, and strategic acquisitions.

Key Competitors

• Mars (Privately Held)
• Nestle (NSRGY)
• Mondelez International (MDLZ)

Competitive Landscape

Hershey benefits from its strong brand portfolio and established distribution network. However, it faces intense competition from global players like Mars and Nestle, who have broader product portfolios and international reach.

Dot's Pretzels

• Year: 2021
• Acquisition Price (USD millions): 1200
• Strategic Rationale: Expansion into the salty snack category and diversification of product offerings.

SkinnyPop Popcorn

• Year: 2019
• Acquisition Price (USD millions): 1600
• Strategic Rationale: Expansion into the ready-to-eat popcorn market and diversification of product offerings.

Historical Growth: Hershey has experienced steady growth over the past decade, driven by organic growth, acquisitions, and international expansion.

Future Projections: Analysts expect Hershey to continue to grow revenue in the mid-single digits over the next few years, driven by innovation, international expansion, and strategic pricing initiatives.

Recent Initiatives: Recent initiatives include acquisitions of pretzel brands, investments in manufacturing capacity, and expansion into new international markets.

Hershey is a strong company with a leading position in the North American confectionery market and successful revenue growth strategies. Their iconic brands and robust distribution network continue to support steady financial performance, even with fluctuating market conditions. They will need to navigate the challenges of increased competition, changing consumer preferences, and rising raw material costs. International expansion and snacking acquisitions are key to future growth.

Data Sources:

• Hershey Company Investor Relations
• SEC Filings (10-K)
• Market Research Reports
• Company Press Releases
• Analyst Reports

Disclaimers:

This analysis is for informational purposes only and should not be considered investment advice. Financial data and market information are subject to change. Investment decisions should be based on thorough research and consultation with a qualified financial advisor.