Leading Category Growth in New Ways Together
Key Takeaways:
- The demand for Hershey products grew in 2020.
- As Hershey identified new capabilities and manufacturing opportunities—from producing facemasks for the community to bringing online additional production capacity, we paved our way for the future.
- Hershey believes that business is collaborative and sees the partnerships we have with employees, customers and suppliers as a mutually beneficial relationship and continues to focus on those relationships during challenging times.
Just over a year into a global pandemic with myriad challenges for us all—both personally and professionally— it’s amazing to look back at what we have accomplished together. It’s even more amazing to look forward and think, “let’s do that again.”
But we should.
Every single day, we get to witness how our collective resilience, smart decision-making and our #strongtogether culture has positioned us to build on our successes and deliver unprecedented growth for our business and our retail partners.
A Growing Opportunity
From the stock-ups in the early spring of 2020 and quarantine baking during lockdown periods, to the rapid adoption of digital shopping that is fueling new occasions, the demand for Hershey products has never been greater.
Together, we have delivered nearly $500 million in growth nationally, and gained market share of 180bps since the start of the pandemic. Our segmented service strategy has provided growth across our core brands and packtypes, including support of critical seasonal sales.
Our retail partners are hungry to capture new growth and partner with our Sales team to plan for this demand. Our retail team is capturing incremental space and executing seasons with excellence. At the same time, the Marketing teams are focused on preparing innovation for 2022 to continue to drive new news and category growth. And our Supply Chain teams are working around the clock to deliver core products, seasons and custom programs to the shelf at unprecedented levels.
Capturing that growth means making important tradeoffs, and the reality is that we have never been more prepared or more capable to make the decisions that get the right product in the right channel at the right time to meet customer and consumer needs.
As we lap a year of COVID, we’re also lapping 2020 Halloween sales, which was our biggest Halloween win ever. Halloween 2021 is shaping up to be even bigger, and in order to win again, we need to lean-in on new approaches to support that unprecedented growth and deliver reliable customer service.
Capabilities Lead the Way
Focusing on employee safety and enabling our Sales and Manufacturing teams to keep working early last year were critical to building capabilities and ways of working that are driving our success. When facial masks were in short supply at the beginning of the pandemic, we invested in our own mask-making facility to provide masks to our employees, their families and our communities. More recently, we organized vaccine distribution for our employees in partnership with local medical authorities to ensure our employees had access to the vaccine at our locations.
About this time last year, Halloween planning was underway with our customers even as we navigated the uncertainty of the pandemic. Led by consumer insights, retailers were setting their plans with us to enable us to make decisions on how to balance the production of both seasonal and everyday products.
Collaboration across critical functions allowed us to be flexible in the early part of our Halloween campaign in 2020 as some retailers pulled back on seasons and increased their everyday orders. As Hershey leaned-in to the optimism of the season and retailers' outlook on Halloween improved, the agility and cooperation across Marketing and Supply Chain would be key to delivering our largest Halloween ever.
Early visibility is key for planning flexibility, as 10 key brands and packtypes delivered nearly $600 million in growth from 2019-2021, resulting in Hershey meeting or exceeding capacity.
Investing in Manufacturing
While early visibility is important for planning, our collaboration across functions helps us to understand where new growth is coming from, and allows us to make strategic investments, particularly in manufacturing. Despite COVID challenges, our year-to-date production output is significantly higher than the same time last year.
We’ve initiated robust recruiting efforts to attract and retain manufacturing employees at key locations, as well as initiating relationships with high-quality co-manufacturer partners. We continue to invest for sustainable long-term growth with over $750M in additional capacity investments and over $160M in capability building across 2021-2022. This year we have additional production capacity coming online for Reese’s, Payday, Almond Joy/Mounds and Jolly Ranchers. These investments ensure that Hershey is able to produce the products that capture growth and meet demands across the portfolio in everyday, seasonal and custom programs.
Winning Together
Under the best circumstances, growing at such levels produces challenges. Navigating huge swells in demand as shopper and retailer expectations change, and as different parts of the country recover quicker than others, creates additional obstacles.
What makes Hershey unique is our commitment to mutual success, with our colleagues, our customers and suppliers. Our ability to deliver in the middle of the pandemic accelerates further volume demands and share gains. Our ability to develop new digital capabilities and adapt quickly strengthens retailer relationships. And, we remain confident to deliver our mutual growth goals for 2021.
