The Hershey Co., Hershey, Pa., has pursued a strategy in 2012 that has moved the company forward on a number of fronts while building its margins, raising its prices and increasing its earnings, said John P. Bilbrey, president and chief executive officer since 2011.
Mr. Bilbrey said Hershey has developed a five-year strategic plan that focuses on its five core brands — Hershey’s, Reese’s, Hershey’s Kisses, Jolly Rancher and Ice Breakers — becoming household names both domestically and internationally.
Mr. Bilbrey said the company has a goal of reaching $10 billion in net sales by the end of 2017, up from about $6.1 billion in 2011.
“I’m optimistic and excited about our future,” he said. “We are focused and know what we need to do to succeed. We have strong plans in place that will enable us to win wherever we compete.”
The company has strategies to lift both domestic and international performance. In the United States, Hershey plans to introduce products with health-conscious or environmentally sustainable features as well as to increase advertising. Abroad, the company plans to make acquisitions and to build its overseas R.&D. capabilities.
Hershey recently introduced products with an environmentally favorable profile: Hershey’s Bliss, produced with cocoa certified by the Rainforest Alliance, and Simple Pleasures, a candy bar that contains 30% less fat than other Hershey’s bars. In addition, Mr. Bilbrey has confirmed plans to increase the advertising budget “in the low double digits.”
Hershey also is stepping up its commitment to competing internationally. To that end, Hershey acquired Brookside Foods of Canada early in 2012, and expects the company to add $90 million in annual revenues. More recently, Hershey said it is acquiring the remaining 49% it does not own of Godrej Hershey Ltd. in India, and will rename the wholly owned subsidiary Hershey India. In 2011, the Godrej/Hershey joint venture had net sales of about $80 million.
“India is a key focus market for The Hershey Co.,” Mr. Bilbrey said.
In addition, Hershey expects to open its first Asian research and development center in Shanghai during the second half of 2012, which will help the company develop and test new products in the international marketplace.
Mr. Bilbrey said he expected full-year net sales growth of about 7% to 9% and full-year adjusted earnings-per-share-diluted growth of 12% to 14%, an increase from a previous estimate of an increase of 10% to 12%. The company expected reported diluted earnings per share for 2012 to be between $2.82 to $2.92 per share and an adjusted diluted earnings per share between $3.11 and $3.17 per share.
Hershey’s brands remained strong in the 2012 marketplace, according to SymphonyIRI. Three of the five top-selling varieties of chocolates in the United States were Hershey’s products: M&M’s, with $417 million in annual sales; Reese’s Peanut Butter Cups, $420 million in annual sales and Hershey’s bar with $261 million in annual sales.