Hershey sees enterprise alternative in household film nights, tight budgets

Hershey saw a strange pattern emerge in early spring. Sales of Hershey’s milk chocolate six-packs soared online and in stores well before Memorial Day, the typical prelude to summer camping trips and backyard gatherings.

The S’more season started early and lasted for months, said Kristen Riggs, chief growth officer, Thursday at a virtual conference hosted by the National Retail Federation.

“It’s been the biggest S’Mores season we’ve ever had,” she said.

Families made the goodies in the back yard to break up the monotony during the pandemic. In parts of the country with higher Covid-19 rates, Hershey saw sales of these milk chocolate packs increase by 40% to 50% compared to other regions.

The S’Mores surge is an example of the growth opportunity the snack and confectionery company sees as consumers spend more time at home trying to create occasion during the global health crisis. Riggs said it wants to participate in new traditions like family movie nights, suggest recipes of candy, and serve customers who want a tasty but affordable treat.

She said the company is moving faster to identify and respond to changes in consumer behavior. When it discovered the s’more trend, she said it had ramped up milk chocolate bar production and inventory in stores. Marketing has been adjusted to portray s’mores as the ideal treat for a more intimate gathering in the back yard rather than a large social event.

“By reading these consumer and retail signals quickly, we were able to seize the opportunity,” she said.

At the start of the pandemic, she said Hershey had been delivering boxes of all of its snacks to a focus group of customers. They were asked how they use the products when they spend more time at home – whether they are placed in candy bowls, added to a baking recipe, or used as a snack during the work day. These findings were used to inform the business strategy.

Hershey’s portfolio includes well-known confectionery brands, like Reese’s, Almond Joy, KitKat, Twizzlers and Bubble Yum as well as SkinnyPop and Pirate’s Booty. It’s one of the consumer goods companies that has noticed trends in staying at home. Net sales rose 4% in the third quarter of the fiscal year as customers indulged themselves with Halloween candy early. Sales of baked goods such as peanut butter, cocoa and French fries, as well as salty snacks, rose by double digits compared to the same period of the previous year.

However, the chocolate company has to adjust to new consumer behavior. Instead of rummaging the aisles of grocery stores, shoppers quickly get in and out of stores. They celebrate holidays differently, which could change the amount of candy they buy. And the rise of online grocery shopping could reduce the chances of a consumer discovering a new product, seeing a Christmas display, or tossing an impulse buy like a candy bar into their shopping cart.

Earlier this month, Bank of America upgraded Hershey’s stock to buy, raising its price target to $ 168, an increase of nearly 13% from its current trading price. The analysts said the company has strong momentum and could benefit from it in the coming months as the introduction of vaccines improves sales outside of home and in emerging markets.

The company’s shares are down nearly 3% over the past year. The market capitalization is $ 31 billion.

Riggs said in an interview that the company is getting smarter when it comes to online product placement. She said it could place an ad for chocolate syrup near the ice cream range on a retailer’s app or website – something that is harder to do in the grocery store. In the digital world, this could lead to shopping during the holiday season by placing ads for sweets or baked goods near goods such as Christmas decorations. It can enable a customer to purchase a collection of recipe ingredients with one click.

It also used to put Christmas candy on shelves and websites, which it does again for Valentine’s Day as people see the seasons as a distraction.

“There is something special about these seasonal traditions and occasions that makes the apartment feel better,” she said.

If Halloween and Christmas are a guide, expect plenty of candy bowls for Valentine’s Day and extended celebrations.

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