THE HERSHEY COMPANY

CONTENTS
1. HERSHEY COMPANY INTRODUCTION
2. PROJECT BRIEF
3. FIVE FORCES ANALYSIS
4. HERSHEY’S SUPPLY CHAIN
5. INDIAN CHOCOLATE INDUSTRY OVERVIEW
6. HERSHEY’S AND INDIA
7. RELATIONSHIP WITH SUPPLIERS
8. BEST PRACTISES
9. TAPPING EMERGING MARKETS -
CHALLENGES
THE HERSHEY COMPANY
 Founded in 1894, by Milton S. Hershey in Pennsylvania, US
 First factory established in 1905
 Pioneered the production of milk chocolates, with the launch of Hershey’s Kiss in 1907
 Went public in 1927, share price at US $61.5. Current share price at US $150
 Over 15000 employees worldwide (2017)
 Revenue close to US $7.8 BN (2019). 90% revenue share from North America alone. 5% year on year
sales growth in the last decade
 Currently the largest chocolate producer in North America, operations in more than 90 countries
supplying more than 80 brands
 In India, Hershey has a manufacturing plant in Mandideep, Madhya Pradesh
 Core values of the company – Deliver, Collaborate, Develop, Question, Innovate, Inspire
PROJECT BRIEF
Through this project we try to understand –
 Best practices at The Hershey Company

 The power of buyers and suppliers in the confectionary market

 There is a considerable difference between Hershey’s domestic and international sales, why so ?

 Sourcing and distributing strategies

 The Indian market is led by Cadbury and Nestle as of now, what steps Hershey is taking and can take to
strengthen their foothold in India
FIVE FORCES ANALYSIS
HERSHEYS AND THE
CONFECTIONARY MARKET
THREAT OF SUBSTITUTE RIVALRY AMONG EXISITNG
THREAT OF NEW ENTRANTS
PRODUCTS OR SERVICES FIRMS

• Economies of scale and

• Few substitutes available
cost of production
for products of comparable
• Differentiation in products • Number of competitors
quality in this industry
• Strong emphasis on less, but of large sizes, no
• Pricing unfavourable for
advertising and customer move goes unnoticed
substitutes
services • Confectionary industry is
• Customized and
• Pre established distribution growing
differentiated services
channels
difficult to achieve
• Govt. regulations

Hershey to take advantage of its Differentiation to have multiple

Hershey should focus on :-
economies of scale production. unique products in the market.
Betterment of quality
Follow its history of innovation to Target untapped markets rather
Customized services
differentiate its products and than winning customers loyal to
Differentiating the products
maintain quality . other brands.
FIVE FORCES ANALYSIS
(contd.)
BARGAINING POWER OF BARGAINING POWER OF
SUPPLIERS BUYERS

• Number of suppliers more

than the number of buyers • Fewer options to get the
• Fairly standardised products supply from
supplied • Less control over prices
• Not a major threat of • Less threat of backward
forward integration integration
• Confectionary industry is the • Quality of the product plays
major business generator for an important role
these suppliers

Multiple suppliers within the Focus on customization,

supply chain innovation and differentiation to
Switch suppliers if costs are attract customers
unfavourable Leverage the economies of scale
Mutually beneficial deals model to sell at lower prices
 HERSHEY’S SUPPLY CHAIN
DEVELOPMENTS
 Mass production – low product costs
 Mars, Ferrero and Hershey to invest US $800 MN for the improvement of productivity on cocoa farms -
better sourcing deals and ensure constant supply of good quality cocoa in the future
 Supply driven model till 2008 to a Demand driven model from 2009
 Partnership with Llamasoft in 2010, Llamasoft’s ‘Data Guru’ application to form future strategies for growth
 Launch of SmartLabel in 2015, a platform developed by Hershey’s in partnership with Grocery
Manufacturers’ Association :
• The first major step towards digitalization of the food supply chain
• Improved transparency of the entire upstream portion of the supply chain.
• Recently announced a pilot with Sourcemap, an interactive tool that allows people to trace an ingredient’s sourcing
journey from the farm.
• Also helps to learn about sustainability projects currently underway
HERSHEY’S SUPPLY CHAIN -
SOURCING OF INGREDIENTS
INDIAN CHOCOLATE INDUSTRY

1 4%
G R–
CA

2018 2024
 HERSHEY’S AND INDIA
 Entered India in 2007 by a joint venture with Godrej forming Godrej Hershey Ltd.
 Manufacturing plant in Mandideep, Madhya Pradesh
 To invest US $50 MN over 5 years (2019-24) in the Indian market
 Southern Indian states contribute to over 33% of Hershey’s Indian market
 Importing ingredients in India is a challenge. Andhra Pradesh and Kerala are coming up as major cocoa
producers for confectionary brands operating in India (7000 metric tonnes and 6500 metric tonnes production in
2016 respectively)
 As per Q2 2018, core brands in India, including Hershey’s Sofit, Jolly, Rancher and Brookside grew over 50% in
sales.
 Clear market leader in chocolate syrup industry
 Competing strongly against Ferrero’s Nutella in the chocolate spread department
 MAJOR HERSHEY’S PRODUCTS
IN INDIA

HERSHEY’S SHAKES HERSHEY’S SPREADS

HERSHEY’S SYRUPS HERSHEY’S KISSES
With HERSHEY Milk and “Spread the Happiness”,
Searching for one but “For over 100 years, iconic
Milkshakes, you can enjoy the tagline with which
Hershey provides five Hershey’s Kisses have
the pure taste of Hershey is promoting its
different flavors to the spread happiness across
HERSHEY'S Milk Chocolate sandwich spreads among
customers to enjoy their the world”.
sip by sip. Happiness is young child and their
drinks or even sundaes. Launched in India in 2018
HERSHEY’S in a bottle. moms
RELATIONSHIP WITH SUPPLIERS
Healthy relations with suppliers, focused on mutually beneficial deals, as reflected in
their Supplier Code of Conduct –

 No child labor in supply chain

 Intolerant to any form of abusive or illegal labor such as forced labor or human trafficking.
 Rights of employees to freedom of association and collective bargaining across its operations.
 Avoidance of any form of discrimination in the workplace and favors diversity and inclusion in work environment.
 No disparate treatment in the workplace
 All workers be provided with a safe and healthy working environment.
 Providing safe and high-quality products
 Suppliers must responsibly and sustainably source ingredients, packaging materials and other goods and services in
a way that will help reduce the impact on air, land and water.
 Verify compliance and auditing by The Hershey Company
BEST PRACTICES
 Sustainable Sugar Sourcing Policy: Procuring 100 % of sugar purchases by 2020 from certified,
responsible and sustainable sources
 Responsible Palm Oil Sourcing Policy : Ensuring its palm oil supply comes from fully traceable
and responsible sources.
 Supplier Development:
• More than 19,000 cocoa farmers in Cote d’Ivoire are enrolled in LEARN TO GROW agricultural and
community training programs.
• Partnered with cocoa suppliers Blommer Chocolate and Olam Cocoa to fund and build a community
health center in Cote d’Ivoire.
• Cocoa For Good: Investing half a billion dollars by 2030 to nourish children, elevate youth, build
prosperous communities and preserve natural ecosystems.
• Child Labor Monitoring and Remediation System (CLMRS)
TAPPING EMERGING MARKETS -
CHALLENGES
 Major dependence on North American market. Sourcing into countries like India, China
becomes a major issue
 Consumers want to know about the ingredients in their food, where they come from, and
how they are made. Plus, customers are health conscious now.
 Too much product differentiation acts against the company while trying to tap emerging
markets
REFERENCES
https://www.thehindubusinessline.com/companies/hershey-eyes-a-bigger-share-of-indian-choco
late-market
https://www.scribd.com/doc/42983333/case-study-of-The-Hershey-Company
https://www.essay48.com/term-paper/15254-Hershey-Company-The-Porter-Five-Forces
https://www.thehersheycompany.com/en_us/home/plant-locations.html
https://www.vault.com/company-profiles/food-beverage/the-hershey-company
https://www.businesstoday.in/magazine/the-hub/all-our-products-will-be-made-in-india/story/
317144.html