November 25, 2012
Introduction/Business Description Go to a candy store and there is very little chance that one will not recognize the name Hershey; it is everywhere, and chances are, most everybody has eaten one of their sweet treats. It is for this reason that Hershey is household name and as such, the background will be discussed. The Hershey Company was founded in 1894 by Milton S. Hershey. A few decades later, The Hershey Company was incorporated in the State of Delaware on the twenty fourth of October 1927. Hershey is mostly known for their production of chocolate and sugary confectionery goods in North America. They make everything from candy, baking items, and refreshments. Hershey manufactures, markets, and sells their goods under many names such as Hershey’s, Reese’s, and Kisses. Hershey has retail operations internationally; the most popular store is Hershey’s Chocolate World in the namesake town of Hershey, Pennsylvania. More stores are located in New York, Chicago, Canada, Dubai, and more. The Hershey Company is divided into two business units, which is chocolate and sweets/refreshments.
Hershey uses many different ingredients in their various confectionery goods such as sugar, corn, peanuts and dairy products. As far as their business units are concerned, the chocolate unit is much more profitable, and for that unit, cocoa products are the most important raw materials. Other products derived from the cocoa include cocoa liquor, cocoa butter, and cocoa powder. The cocoa beans and their derivatives are sourced directly to Hershey with no middle man. Hershey gets its supply of cocoa international suppliers, with hardly any of it being from the United States – where Hershey’s operations are located at. The beans are usually grown in regions near the equator in South America and West African regions; the latter of the regions accounts for near 70% of the world’s supply of cocoa beans. In an attempt to keep costs to a minimum, The Hershey Company buys its major raw materials in advance of three to twenty four months so that they are not affected the price fluctuations. Also, to keep the costs lower, for both Hershey, and ultimately the consumers, Hershey enters into contracts with third parties; this too will give them the edge over competition.
Chances are with Hershey’s wide array of products, you’ve picked up one of their products at one point or another – whether it was a variety of chocolate, or chewing gum. While we as the end consumers are ultimately considered customers of Hershey products, Hershey has many bigger buyers via wholesalers. Hershey mainly sells to wholesalers, grocery stores, drug stores, vending companies, dollar stores, etc. These customers are in the middle of the supply chain which will ultimately reach us. According to Hershey’s 10K report, McLane Company, Inc. was responsible for nearly a quarter of Hershey’s total net sales at 22.3%. McLane Company distributes mostly to Wal-Mart Stores, Inc.
Hershey makes many products from chocolate confectionery goods, to breath mints and gum. With their primary business unit being in chocolate, it is no surprise that there are products marketed under more than 80 different brand names. Hershey has three primary brand franchises: Hershey’s, Reese’s, and Kisses. Products include, but are far from limited to the following products: Hershey’s milk chocolate bar, Hershey’s Nuggets, Hershey’s Drops, Hershey’s Hugs, Reese’s peanut butter cups, Reese’s Pieces, Reese’s Nutrageous, Reesesticks, Hershey’s Kisses, 5th Avenue, Almond Joy, Heath, Jolly Rancher, Kit Kat, Milk Duds, Twizzlers, Whoppers, and York Peppermint Patties. Hershey also markets other products other different product lines that include premium products, snack products, refreshment products, and pantry items. Another company, Artisan Confections, which is owned by Hershey, markets Scharffen Berger high-cacao…