Hershey to expand in hand-to-mouth category

by Jeff Gelski
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BOCA RATON, FLA. — The Hershey Co. plans to increase its presence in the hand-to-mouth category in 2010 through unwrapped bite-size candy available in Hershey’s Milk Chocolate, Hershey’s Cookies and Cream, and Reese’s Mini Minis, according to a Feb. 16 presentation at the Consumer Analyst Group of New York (CAGNY) conference going on in Boca Raton.

The company also plans to increase advertising spending by 25% in 2010, work with retail outlets to create more customizable displays for each specific store, and continue to expand internationally, said David West, president and chief executive officer.

“Hand-to-mouth is a growing segment that represents over 16% of total chocolate sales and yet is one in which our biggest brands do not currently participate,” Mr. West said.

The Reese’s Mini Minis will maintain the integrity of the cup form although the cup will be smaller. For another Hershey innovation in 2010, Jolly Rancher Awesome Twosomes will combine two “bold and intense” flavors with a chewy candy outside and a soft chewy center, Mr. West said.

The 25% increase in advertising spending for 2010 follows a 26% increase in 2008 and a 50% increase in 2009. Hershey plans to run ads for York, Mounds and Almond Joy in 2010, Mr. West said.

To present products effectively in stores, Hershey is working on new ways to analyze shopper data, syndicated data and loyalty card information, Mr. West said. The hope is that each individual store will have its own demand profile.

“And we will be able to get the right brand, right tax and right marketing program with retail execution tailored to the demographics and needs of the particular store,” Mr. West said.

He gave an example of video mining technology creating a convenience store “heat map” that determines the optimal locations for the candy aisle and various displays.

“We are rolling out new fixtures in 2010 and 2011 that will generate vast improvements in aisle architectures and shop-ability,” Mr. West said.

Internationally, Hershey sales outside of the United States and Canada should reach about $1 billion in five years at current organic growth rates. Mr. West said the global confectionery market remains fragmented even after recent large deals, including Mars, Inc. buying the Wm. Wrigley Jr. Co. and Kraft Foods Inc. agreeing to buy Cadbury P.L.C.

“This is among the least consolidated of any major global category,” Mr. West said of the confectionery market. “Deployers with a 2, 3 or 5 market share have meaningful global business.”

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