US confectionery giant Hershey is in discussions to secure wider distribution of its products in more European markets.
Hershey, which generates the bulk of its sales in the US, is building a presence in emerging markets like Mexico, Brazil and China.
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However, there are signs that Hershey, which wants to see its sales outside the US grow from US$862m in 2010 to $1bn by 2015, is also expanding in more mature markets. Last year, Hershey struck a deal with Asda in the UK, which saw the local arm of Wal-Mart Stores sell the confectioner’s products on an exclusive basis in the market.
Speaking to just-food at the ISM confectionery industry exhibition in Cologne today (30 January), Dale Tipple, regional sales director for the Americas, said Hershey was in talks to build distribution in Continental Europe. “We’re having conversations,” he said, although he declined to comment further.
Hershey products can be found in markets where it does not have formal distribution. In Germany, for example, where Tipple said Hershey does not have a distributor, consumers buy the company’s products via outlets like Amazon.
Tipple praised the contribution retailers like Amazon can provide to the sector. “In the US, where Amazon is a wonderful customer, it almost seems that their sweet spot is those second- and third-tier brands that you cannot find elsewhere. It’s pricey but you can’t buy it anywhere else,” he said. “They really fit an unmet need in retail today.”
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By GlobalDataReflecting on Hershey’s international strategy, Tipple said the way the company was now structured allowed it to focus more on particular markets. “We’re really structured around three business units: US, Americas and then our balance of countries. That allows us to have a much greater focus on different geographies. Prior to that, it was the US/Canada organisation and then it was international. Now, we’re becoming much more focused on specific markets and geographies and opportunities,” he said.
Mexico, China, Brazil and India remain Hershey’s “priority” international markets, Tipple said. Last year, there was uncertainty about Hershey’s future in India, where it runs a venture with local conglomerate Godrej. Reports had claimed the venture had come to an end but it remains in operation, selling products from confectionery to soy milk and cooking oil.
Last July, amid the speculation, Hershey president and CEO John Bilbrey hinted that the way the company operated in India could one day change. “How we participate there could potentially look different but we feel very good about the potential of our businesses in India,” he told Wall Street analysts.
Today, at the ISM exhibition in Cologne, Tipple said the venture continued to “provide tremendous insight” into the development of the Indian market and gave Hershey a platform to build a business in a country that could become more open to multinational investment.
“I think it’s a tremendous opportunity. The joint venture is a great place to start. Unless you live there and understand the market place, you’re going to be so disappointed when that door finally swings open,” he said.
Asked what the immediate future was for the venture, he added: “I don’t have a crystal ball. I don’t foresee any changes.”
