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The Hershey Company SWOT & PESTLE Analysis

ID : 52515953| Mar 2019| 15 pages

COMPANY PROFILE -The Hershey Company

Business Sector :Confectionery

Operating Geography :USA, North America, Global

About The Hershey Company :

The Hershey Company or the Hershey’s was founded by Milton Hershey in 1894 in USA. Today it is one of the leading confectionery companies in the world, employing 21000 people globally. Some iconic brands of the company are Hershey’s Kisses and Reese’s Peanut Butter Cup that were some of the most widely consumed candy brands in the USA in 2017. Some of its other products are chewing gums, ice creams and milk drinks. HB Reese Candy Company, a division of Hershey, is licensed to produce Kit Kat only in USA whereas in the rest of the world it is produced by Nestle.

The Hershey Company Revenue :


$7,791.1 million – FY ended Dec 2018 (YoY growth of 3.7%)
$7,515.4 million – FY ended Dec 2017

Competitive Analysis of The Hershey Company

SWOT
PESTLE
The SWOT analysis of The Hershey Company is presented below:
Strengths
Weaknesses
1. Broad portfolio of iconic brands
2. Undisputed confection leader with a strong brand image in the United States
3. Successful cost reduction activities
4. Strong focus on digital innovation
5. Consistent financial performance
1. Low growth in international markets
2. Ineffective management team
Opportunities
Threats
1. Increasing awareness about health benefits of chocolates
2. Rising chocolate consumption in developing countries
3. Leveraging artificial intelligence and advanced analytics
4. Rising demand for sugar free confectioneries
5. Impulse consumption an opportunity for confectionery segment
1. High competition in confectionery and snacking segment
2. Cyber security threats
3. Fluctuations in raw material prices
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Detailed SWOT Analysis of The Hershey Company

 

Strength

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Weakness

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Opportunity

1. Increasing awareness about health benefits of chocolates: Major drivers for increasing awareness about health benefits of chocolates are: anti-oxidants enrichment, anti-aging properties and blood pressure suppressing nature of chocolates. Dark chocolate is recommended to slow down aging and prevent cardiovascular diseases. Chocolate is also believed to relieve stress. There are also new applications of chocolate and confectionary items, as well as increase in consumption of chocolate flavoured milk, ice creams, bakery products etc which are expected to increase the demand for chocolates. Hershey has a variety of such products that are expected to have high demand, like Hershey milk syrup and multiple dark chocolate brands like Scharrfen Berger (produced by Artisan Confections Company, a Hershey subsidiary), Hershey Special Dark chocolate and Hershey Dark Chocolate Kisses.

2. Rising chocolate consumption in developing countries: Developed countries have long been thriving markets for chocolate consumption. However, in recent years, developing countries are seeing a rise in chocolate and confectionery consumption. Some major trends driving the growth in developing countries are: shift in consumer tastes, increasing urbanisation, widespread availability of chocolates, increasing perception of chocolate as an affordable luxury, growth opportunities in handmade chocolates, rise in consumption of niche products (like chocolate drinks, fudge, mousse) and preference for chocolates as festival gifts. Asia Pacific region, especially India and China, is expected to be the fastest growing market over 2016-2024, mainly due to rising influence of Western lifestyle, seasonal and festive sales, and awareness of health benefits of chocolates. Though Hershey is faring poorly outside USA and retreating from many international markets, its products seem to be doing very well in India. Currently Hershey is experiencing a 50% growth rate in India and this is the reason for the company planning to introduce more brands in the Indian market, looking at the huge opportunity available. The company is planning to invest $50 million in India over the next 5 years starting 2019 to build infrastructure and manufacturing capabilities. However, despite the huge potential in Chinese market too, Hershey has not fared well in China, having been forced to sell off its Chinese brand Golden Monkey Candy.

3. Leveraging artificial intelligence and advanced analytics: Like most industries, artificial intelligence has found applications in the confectioneries industry too. Hershey can leverage advanced analytical techniques to get a deep understanding of consumers, shoppers, end-to-end supply chain, retail environment and macroeconomic factors at both a broad and precision level. AI can help companies create the right candy product. In 2018, AI technology along with Bayesian Optimisation technique was used by Google to design the perfect chocolate chip cookie. Hershey’s licorice brand Twizzler had a problem of weight variation due to slight variations in temperature. But the company must ensure that when the customers buy the package, it weighs exactly the same as mentioned on it. This has proved to be a challenging problem which was solved with the help of Microsoft’s AI system, which uses machine learning to let the machine access millions of data points to reduce the variability of weights.

The remaining section of “Opportunity” is available only in the 'Complete Report' on purchase.

Threat

This section is available only in the 'Complete Report' on purchase.

Major Competitors :

Major Brands :

  • Hershey’s
  • Hershey’s Kisses
  • Reese’s
  • KitKat (in the United States)
  • Brookside
  • Take 5
  • Jolly Ranchers
  • Twizzlers
  • Ice Breakers
  • barkTHINS
  • Cadbury
  • Good & Plenty
  • Heath
  • Lancaster
  • Payday
  • Rolo
  • Whoppers
  • York

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Name
Business Segment
Year
Type
Objective/Synergy Achieved
Amplify Snack BrandsConsumer snacking2018AcquisitionThe acquisition will allow Hershey to capture more consumer snacking occasions by creating a broader portfolio of brands.
Ripple Brand CollectiveChocolate snacking 2016AcquisitionThe acquisition will broaden Hershey’s product offerings in the premium and portable snacking categories.
KRAVE Pure FoodsPremium meat snack products2015AcquisitionGives Hershey an entry into the rapidly growing meat snacks category
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in The Hershey Company Analysis Report

1. The Hershey Company - Statistics & Facts https://www.statista.com/topics/2342/the-hershey-company/

2. Net sales of the leading confectionery companies worldwide in 2017 (in million U.S. dollars) https://www.statista.com/statistics/252097/net-sales-of-the-leading-10-confectionery-companies-worldwide/

3. Annual Report 2018 https://www.thehersheycompany.com/content/dam/corporate-us/documents/annual-reports/2018_The_Hershey_Company_10_K.pdf

4. Hershey Reports Fourth-quarter And Full-year 2018 Financial Results; Provides 2019 Outlook https://www.thehersheycompany.com/en_us/news-detail.html?2385535

5. Hershey: Sweet Product, Sour Management https://seekingalpha.com/article/4236398-hershey-sweet-product-sour-management

Copyrights and Disclaimer

The Hershey Company SWOT and PESTLE analysis has been conducted by Nipunn V and reviewed by senior analysts from Barakaat Consulting.

Copyright of The Hershey Company SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

The Hershey Company SWOT & PESTLE Analysis
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