Hershey: Going through a Sweet Recession

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Case Details:

Case Code : MKTG222
Case Length : 17 Pages
Period : 2000-2009
Pub Date : 2009
Teaching Note :Not Available
Organization : The Hershey Company
Industry : Chocolate and Confectionary
Countries : US, Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

It has several iconic brands like Hershey's Milk Chocolate Bar, Reese's Peanut Butter Cup, and Hershey's Kisses in its portfolio. From the beginning, the company had followed a strategy of growing the business through product line extensions and special edition products4.

During the period 2000-2005, Hershey experienced flat sales. The company realized that in order to grow its business, it needed to introduce new products and enter new market segments.

Accordingly, it entered the snacks and the premium dark chocolate market segments, with several new products.

Targeting the health-conscious segment of the market, the company also developed a portfolio of products, which, it said, used a range of items with proven health benefits.

However, in spite of the new products, sales remained flat. In February 2007, the then President and CEO of the company, Richard H. Lenny (Lenny), initiated a three-year restructuring exercise to streamline production, develop a flexible supply chain, and generate savings to invest in growth initiatives like international expansion and new product innovation.5 The restructuring which was to cost US$ 550-575 million, was expected to result in annual savings of US$ 170-190 million for the company by 2010...

 Excerpts >>

4] Prakash Kolli, "Hershey Hurts in Move Away From Core Chocolate," http://seekingalpha.com, February 9, 2007
5] "Hershey Announces Three-Year Supply Chain Transformation," www.foodprocessing.com, March 13, 2007.


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