US chocolate maker Hershey has insisted it remains focused on driving growth at home, even as it works to expand its business in key international geographies.
Addressing analysts at the Consumer Analyst Group of New York conference yesterday (20 February), Hershey management once again outlined plans to grow its top line by expanding in key international geographies, notably China, Mexico and Brazil. The group emphasised it is “on-track” to grow international sales by 15-20% in 2013, with the target of reaching US$1bn in international sales by end-2014.
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However, Hershey emphasised, the Reese’s Pieces maker also views the mature US confentionery market as a “growth opportunity”.
“Focus on our core US business is a top priority and fundamental to our success,” CEO John Bilbrey told his audience. “We see the US as an attractive growth market.”
Bilbrey said the US confectionery category is “fundamentally advantaged” because “confections are available almost everywhere”. The result is that Hershey brands benefit from high household penetration and appeal to impulse shoppers.
He added: “Another unique aspect of the category is its ubiquity. With strong presence, not only in traditional channels, such as mass and food, but also in channels that many CPG companies do not meaningfully penetrate, such as convenience stores, drug, wholesale club, dollar stores, specialty channels like food service and even vending.”
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By GlobalDataAccording to Bilbrey, Hershey is growing its US business by developing its multi-channel strategy. “A meaningful piece of our business comes in what some companies may call alternate channels,” he said.
Bilbrey revealed Hershey has increased its share of convenience sales for four consecutive years. “Our iconic brands and instant consumable packaging is offering alternatives, it’s meeting the needs of consumers in this very important, on-the-go environment.”
Hershey has driven top line growth in the US by investing in product development and brand building activities. Bilbrey added Hershey is also able to grow sales in the US because the confectionery category is “highly responsive” to merchandising.
Michele Buck, chief growth officer, added Hershey is well-placed to benefit from this because it has invested in “consumer and shopper” insights in order to “build messaging and programs to best meet consumer needs”.
“This understanding of the consumer drives all of our portfolio and investment decisions,” she emphasised.
This strategy has allowed Hershey to grow market share – a trajectory that the company intends to build upon. In 2012, Hershey’s retail take away outpaced the category, rising 5.7%. As a consequence Hershey saw a market share gain of 0.6 points.
