Hershey Hones Its C-store Channel Strategy
HERSHEY, Pa. – The Hershey Co. is preparing to change its strategy in the convenience channel following a shift in the competitive dynamics of the candy and snack categories. Its candy brands struggled against a wide variety of ready-to-eat options in recent months, according to a Food Business News report.
"Last year, Hostess, Twinkie, some of the bakery segment was not participating in the category; this year, they are," stated Hershey's President and CEO J.P. Bilbrey during last week's second-quarter earnings call.
These competing snack segments had stronger growth during the quarter than candy, mints and gum products, Bilbrey added. During Q2 2014, Hershey saw overall c-store growth of 1.3 percent, with a 7.2-percent increase in mints making up for a weakness in chocolate. The company suffered some market share loss.
"Our c-store performance was soft in the first half of the year, given that more of our innovation was in take-home vs. instant consumable pack types," Bilbrey said. He added that Hershey's merchandising and programming efforts were not fully effective against in-store snack category activity and economic challenges.
To help make up for these weak points, Hershey will launch several initiatives, including new limited-edition products and increased displays of king-size items.
Although it expects to see somewhat lower sales volumes in response to the recently announced 8-percent price increase on its products, Hershey remains confident about the future.
"While it is a bit early to measure consumer reaction and response to pricing, we feel that our brand support, innovation, consumer spending and investment in go-to-market capabilities should enable us to deliver on our long-term targets," Bilbrey said.