David West, the man set to become Hershey’s new chief executive, will be hoping life is sweet at the helm of the US confectionery giant.
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It’s been a whirlwind seven days for West, who on Tuesday (2 October) was named as president and CEO of Hershey, just a day after the company announced Rick Lenny was to quit. West, who has been at Hershey since 2001, will not officially take the CEO role until 1 December but will no doubt be spending the next few weeks drawing up his strategy to revitalise the business.
West, a former executive at Kraft Foods’ Nabisco unit, takes the top job at Hershey amid widespread speculation over the future of the business. The talk is that Lenny decided to leave Hershey after growing frustrated at the company’s ownership structure. The Milton Hershey School Trust, established by the company’s founder Milton Hershey in 1909, owns around 30% of the equity in Hershey but controls as much as 80% of the voting rights.
A number of industry watchers see that arrangement as an obstacle blocking Hershey from merging with another of the world’s leading confectionery groups, such as Cadbury Schweppes. Some analysts believe such a deal would be a good move for Hershey, reviving a company that has struggled amid growing competition in its backyard from the likes of Mars and been slow in investing into the world’s emerging confectionery markets. It’s believed that Lenny’s departure was likely to have been related to the Hershey Trust’s reluctance to enter into a merger with one of its global rivals.
Rather predictably, Hershey has remained tight-lipped on the reasons for Lenny’s exit. Hershey said the company had “developed” under Lenny’s tenure, and has been “executing its value-enhancing strategy with the over-arching goal of building stockholder value over the long-term”. The trust, meanwhile, said it was committed to maintaining its current position on ownership.
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By GlobalDataIndeed, the promotion of West could be seen as a sign of the status quo prevailing at Hershey. West’s six years at the company has seen him hold a variety of executive roles, ranging from business development to CFO and COO.
West will need to lean on that experience in the months ahead as he looks to breathe fresh life into a business that has been criticised for being too slow to invest in the growth areas of the US chocolate market and not having a strong enough presence overseas. The company has already made a series of moves to remedy the situation; this year, Hershey has signed deals in China and India in a bid to catch up with the likes of Cadbury and Wrigley in the battle for soaring confectionery sales in the two countries.
However, one analyst told just-food that Hershey’s moves into the more vibrant areas of the US chocolate market had been “half-baked”, while the company’s lack of investment overseas means it remains “landlocked”.
“Would Hershey be better served as part of another company?” the analyst wondered. West’s appointment suggests Hershey’s owners think otherwise.
