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The Hershey Company

The Hershey Company

Tagline

The Great American Chocolate Bar There's a smile in every Hershey Bar.

Net Worth

$33,260,000,000

Started in (City)

Lancaster

Started in (Country)

United States of America

Incorporation Date

08th December, 1894

Bankruptcy Date

-

Founders

  • Milton S. Hershey

About

The Hershey Company is a world-renowned chocolate manufacturer and an American multinational company. It manufactures baked products, such as cookies, cakes, milkshakes, drinks, and many more that are produced globally. Its headquarters are in Hershey, Pennsylvania. It is available across the United States, and in over 60 countries worldwide. Hershey has a leading and growing share of the U.S. chocolate market; its portfolio of brands is more popular among Americans than any other company’s brands. This enables it to charge higher prices than competitors, which in turn enables it to earn high returns on invested capital.

Beginning

After an apprenticeship to a confectioner in 1873, Milton S. Hershey founded a candy shop in Philadelphia. The Hershey Company traces its origins to the 1880s when Milton S. Hershey founded the Lancaster Caramel Company in Lancaster, Pennsylvania. This candy shop was only open for six years, after which Hershey apprenticed with another confectioner in Denver, where he learned to make caramel. After another failed business attempt in New York, Hershey returned to Pennsylvania, wherein in 1886 he founded the Lancaster Caramel Company. The use of fresh milk in caramels proved successful, and in 1900, after seeing chocolate-making machines for the first time at the 1893 World\’s Columbian Exposition in Chicago, Hershey sold his caramel company for $1,000,000 (equal to $30,732,000 today) and began to concentrate on chocolate manufacturing. After seeing German-made chocolate-processing machinery at the World’s Columbian Exposition of 1893 in Chicago, Hershey decided to go into the chocolate business. In 1894 he started a chocolate company that had various confections on the market by the following year. In 1900 he sold the caramel company to a competitor and began the manufacture and sale of milk chocolate bars. The business was so successful that in 1903 Hershey started work on a new factory in Derry Township, Pennsylvania. It eventually became the world’s largest chocolate manufacturing plant. An unincorporated community called Hershey developed around the factory. In 1908 the Hershey Chocolate Co. was incorporated, and in 1927 it was reorganized as the Hershey Chocolate Corporation, a publicly-traded company. During the 1960s Hershey bought the manufacturer of Reese’s Peanut Butter Cups and two pasta businesses. In recognition of its diversification, the company was renamed Hershey Foods Corporation in 1968. In 1998 the company sold off its pasta operations. Hershey Foods Corporation was renamed Hershey Company in 2005. In 2018 Hershey again branched out from candy with its acquisition of Amplify Snack Brands, maker of SkinnyPop popcorn. As a Hershey subsidiary, the brand acquired other healthy snack companies, including the maker of Pirate’s Booty baked puffs.

Road to Success

Over more than a century, our iconic brands have been built on a foundation of community investment and connections between people around the world. Equally competitive and compassionate, we continue to build a legacy as we invest in the people and snacks of the future. The company began to grow as the result of the success of its milk chocolate bars. He built a new milk-processing plant in 1896 and was able to develop the now-famous ’Hershey Process’ after three years of hard work. In 1907, the mini hill-shaped chocolate called ’Hershey’s Kiss’ was released. This turned out to be a huge success and was marketed throughout North America. Today it has become so popular that nearly 80 million units of this chocolate are produced every day to suffice the demand worldwide. Soon, they began introducing new and innovative products as time went by. In 1925 Mr. Goodbar was released, Hershey’s syrup was introduced in 1926, and Krackel bar was introduced in 1938. The fact is that even Hershey’s competitors have flourished using Hershey’s top-quality materials. Today Hershey’s is one of the biggest chocolate makers in the world. In 2010 its annual revenue was close to $5.5 billion and out of it, the profits were $500 million. The total number of employees working for Hershey’s now is more than 14,000. From starting out as a small single chocolate supplier, It has gone on to become the all-in-one supplier for all the world’s chocolate needs. Hershey’s will be forever remembered for the quality and service with which it did its business. Today its success has made it a product that very few Americans may not have used at least once in their lifetime. The founder’s vision and philosophy are firmly at the root of the immense success that Hershey’s has achieved to date.

Challenges

The only company that comes close to matching Hershey in the U.S. is Mars -- the company that Berkshire Hathaway helped to finance in the 2008 acquisition of Wrigley. But even Mars has just a 30% share of the U.S. chocolate market compared to Hershey’s 44% share. Wrigley, in which Berkshire Hathaway maintains a minority interest, has an overwhelming 58% share of the U.S. gum market -- a market that Hershey largely ignores. Moreover, Wrigley generates most of its sales outside of the U.S., making it less of a threat to Hershey. Mars and Nestle (ADR) are Hershey’s primary competitive threats in the United States, where Hershey generates close to 85% of its sales. Though private labels are unable to attract a significant following among brand-conscious consumers, other brands offer substitutes. For instance, Mars’s M&Ms may be substituted for Reese’s Pieces. Nestle is launching a direct competitor to Reese’s Peanut Butter Cups. Just about the only thing that can compete with a well-known American brand is another well-known American brand.

Failures

Hershey’s ERP Implementation Failure When it cut over to its $112-million IT systems, Hershey’s worst-case scenarios became reality. Business process and systems issues caused operational paralysis, leading to a 19 percent drop in quarterly profits and an 8 percent decline in stock price. In 1996, Hershey’s set out to upgrade its patchwork of legacy IT systems into an integrated ERP environment. It chose SAP’s R3 ERP software, Manugistics supply chain management (SCM) software, and Seibel’s customer relationship management (CRM) software. Despite a recommended implementation time of 48 months, Hershey's demanded a 30-month turnaround so that it could roll out the systems before Y2K. To meet the aggressive scheduling demands, Hershey’s implementation team had to cut corners on critical systems testing phases. When the systems went live in July of 1999, unforeseen issues prevented orders from flowing through the systems. As a result, Hershey’s was incapable of processing $100 million worth of Kiss and Jolly Rancher orders, even though it had most of the inventory in stock.

Achievements

  • Diversity Inc’s “25 Noteworthy Companies”

Subsidies

  • Hershey India Private Limited
  • Hershey Mexico S.A. de C.V. (Hershey México)
  • Amplify Snack Brands, Inc.
  • ONE Brands, LLC
  • Ripple Brand Collective, LLC
  • Artisan Confections Company
  • Peter Paul Candy Manufacturing Company
  • Mauna Loa Macadamia Nut Corporation

CEOs

  • Harold S. Mohler
  • Michele Buck