The Hershey Company

The Hershey Company

Type	Public (NYSE: HSY)
Founded	February 9, 1894[1]
Headquarters	Hershey, Pennsylvania, USA
Key people	Milton S. Hershey, founder; David J. West,[2] current CEO
Industry	Chocolate and candy manufacturer
Products	See list of products manufactured by The Hershey Company
Revenue	▲ $4.947 billion USD (2007)[3]
Net income	▲ $214 million USD (2007)[3]
Employees	11,000 (2008)[3]
Website	hersheys.com

The Hershey Company (NYSE: HSY), known until April 2004 as the Hershey Foods Corporation^[4] and commonly called Hershey's, is the largest chocolate manufacturer in North America.^[5] Its headquarters are in Hershey, Pennsylvania, a town permeated by the aroma of cocoa on some days,^[6] and home to Hershey's Chocolate World. It was founded by Milton S. Hershey in 1894 as the Hershey Chocolate Company, a subsidiary of his Lancaster Caramel Company. Hershey's candies and other products are sold worldwide.^[7]

Hershey's is one of the oldest chocolate companies in the United States, and an American icon for its chocolate bar. The Hershey Company owns many other candy companies and is also affiliated with Hershey Entertainment and Resorts Company, which runs Hersheypark, a chocolate-themed amusement park; the Hershey Bears hockey team; Hersheypark Stadium; and the GIANT Center.

History

Outlet in Niagara Falls, Ontario, Canada

Hershey's Times Square Store, Times Square, New York City

After completing an apprenticeship to a confectioner in 1876, Milton Snavely Hershey founded a candy shop in Philadelphia, which failed six years later.^[8] After trying unsuccessfully to manufacture candy in New York, Hershey returned to Pennsylvania, where he founded the Lancaster Caramel Company, whose use of fresh milk in caramels proved successful.^[9] In 1900, Hershey sold his caramel company for $1,000,000^[10] (about US$24,000,000 in today's currency) and began to concentrate on chocolate manufacturing.^[11] In 1903, Hershey began construction of a chocolate plant in his hometown, Derry Church, Pennsylvania, which later came to be known as Hershey, Pennsylvania.^[12] The milk chocolate bars manufactured at this plant proved successful, and the company grew rapidly thereafter.

While his company was successfully selling sweet chocolate products, Milton Hershey knew that a fortune lay in creating and selling milk chocolate products. Milton built a milk-processing plant in the year 1896, to be able to create and refine a recipe for milk chocolate candies. In 1899, three years later, he developed the Hershey process.

In 1907, Hershey introduced a new candy, small flat-bottomed conical-shaped pieces of chocolate that he named "Hershey's Kisses". Initially they were individually wrapped by hand in squares of foil, and the introduction of machine wrapping in 1921 simplified the process while adding the small paper ribbon to the top of the package to indicate that it was a genuine Hershey product.^[13] The product was trademarked three years later and went on to become one of the most successful and well-known products ever produced by the company. (In 2007, in a rare embrace of a commercial product on a first-class stamp, the USPS marked the one-hundredth anniversary of Hershey's by placing an image of one on its Love Stamp.) Other products introduced include Mr. Goodbar (1925), Hershey’s Syrup (1926), chocolate chips (1928), and the Krackel bar (1938).

Harry Burnett Reese worked at Hershey beginning in 1917 as a dairyman for the Hershey Farms. In 1921 he went to work in the factory. His son (Ralph) later recalled that he said that if Mr. Hershey could sell seven carloads of chocolate a week that he saw no reason why he couldn't sell a couple hundred pounds. Reese experimented at his home with various confections. By 1925 he had developed an assortment of candies which he was able to sell to department stores in Lancaster, advertised as "made in Hershey". In 1926 he built his own factory. During the depression years Reese's company struggled but was aided by Milton Hershey with free sugar and cut-price chocolate as well as with engineering help when Reese's equipment had problems. In 1941 with the wartime rationing of sugar, Reese focused all of his production resources and focus on peanut butter cups which required less sugar than most other confections of the time. The candy became very popular, selling for a penny per cup, and Reese discontinued all of his other products. By the early 1950's his company had become one of the largest candy companies in America with annual sales of $10 million. In 1956 H.B. Reese died without leaving a plan of succession. The company floundered for several years under the control of his 6 surviving sons. In June 1963 Hershey acquired Reese's company for $23.3 million at a time when Reese's sales were $14 million annually.^[14]

In 1940, over two years after the defeat of the CIO union, an affiliate of the American Federation of Labor successfully organized Hershey's workers under the leadership of John Shearer, who became the local's first president. Currently, Local 464 of the Bakery, Confectionery, Tobacco Workers, and Grain Millers represents the Hershey workers, and although it calls itself the "Chocolate Workers" it has successfully organized workers in other local industries.

In 1941 Bruce Murrie, son of long-term President William F.R. Murrie, struck a deal with Forest Mars to create a hard sugar coated chocolate that would be called M&M's (named for the two men). Murrie had 20 percent interest in the confection. The new confection would use Hershey chocolate during the rationing era during World War II. In 1948 Mars bought out Murrie's interest and would become one of Hershey's primary competitors.^[15]

In 1970, the Chairman of the Board of Directors, Daniel Jones was arrested on charges of embezzling funds and funneling profits to the North Vietnamese government. At a preliminary hearing, it came to light that many of the documents had been forged by another member of the board, Joseph Tresnep, who later admitted under oath that he wanted to take his position as Chairman. In 1971, the charges were formally dropped although the reputation of the company was badly damaged. Jones was later replaced by Roger W. Hershey as Chairman of the Board.

In 2007, the Chocolate Manufacturers Association in the United States, whose members include Hershey, Nestlé, and Archer Daniels Midland, lobbied the Food and Drug Administration to change the legal definition of chocolate to let them substitute partially hydrogenated vegetable oils for cocoa butter in addition to using artificial sweeteners and milk substitutes.^[16] Currently, the FDA does not allow a product to be referred to as "chocolate" if the product contains any of these ingredients.^[17][18]

In fall 2007, Hershey changed their milk chocolate recipe by adding lactose, milk fat, and the food additive PGPR.

In December 2007, Philadelphia city councilman Juan Ramos called for Hershey's to stop marketing "Ice Breakers Pacs" due to the resemblance of the packaging to that used for street drugs.^[19]

Manufacturing plants

The Hershey, Pennsylvania plant, covering two million square feet of manufacturing space (185,806 square meters), is the largest chocolate factory in the world.^[20]

The first plant outside Hershey, Pennsylvania opened on June 15, 1963 in Smiths Falls, Ontario, Canada. Hershey's third opened on May 22, 1965 in Oakdale, California.^[21] In February and April 2007 Hershey's announced that their Smiths Falls^[22][23] and Oakdale^[24] plants would close in 2008, being replaced in part by a new facility in Monterrey, Mexico. The Oakdale factory closed on February 1, 2008.^[25] According to the Hershey's web site, the Smiths Falls visitors center will remain open through 2008.^[26]

Tours were operated in the Pennsylvania and California factories, but this is no longer the case.^[27] As of 2008, a factory tour is still offered at the Smiths Falls, Ontario, Canada plant.^[28] Visitors to Hershey, Pennsylvania can experience Hershey's Chocolate World visitors center and its simulated tour ride.

Other sales and acquisitions

In 1977, Hershey acquired Y&S Candies, founded in 1845 and now makers of Twizzlers licorice candies. In 1986, Hershey's began a brief foray into cough drops when it acquired the Luden's cough drops brand. By 2001, the brand had been sold to Pharmacia^[29] (Ludens is now currently a product of Johnson & Johnson). In 1988, Hershey's acquired the rights to manufacture and distribute many Cadbury-branded products in the United States. Cadbury creme eggs sold in the United States are imported by Hershey from Cadbury in the United Kingdom.^[30]

On July 25, 2002 it became public knowledge that the Hershey Trust Company was seeking to sell its controlling interest in the Hershey Foods Corporation. The value of Hershey stock skyrocketed 25% with over 19 million shares trading that day. However, over the next 55 days, widespread press coverage, as well as pressure from Pennsylvania Attorney General Mike Fisher, the Community of Hershey, and Dauphin County Orphans' Court Senior Judge Warren G. Morgan, led to the sale being abandoned. The seven Hershey Trustees who voted to sell Hershey Foods on September 17, 2002, for US$12.5 billion to the William Wrigley Jr. Company were removed by Attorney General Fisher and Judge Morgan. Ten of the 17 Trustees were forced to resign and four new members who lived locally were appointed. The former Pennsylvania Attorney General, LeRoy S. Zimmerman, became the new Chairman of the reconstituted Milton Hershey School Trustees. Mr. Zimmerman has publicly committed to having the Milton Hershey School Trust always retain its interest in The Hershey Company.

In December 2004, Hershey acquired the Mauna Loa Macadamia Nut Corp. from The Shansby Group.^[31]

In July 2005, Hershey acquired the Berkeley, California-based boutique chocolate-maker Scharffen Berger.^[32]

In November 2005, Hershey acquired Joseph Schmidt Confections, the San Francisco-based chocolatier.

In November 2006, Hershey acquired Dagoba Organic Chocolate, a boutique chocolate maker based in Ashland, Oregon.

Hershey's chocolate is available across the United States, due to their wide network of distribution.^[33] They have three mega distribution centers, with modern technology and labor management systems.^[34]

Since 2005, Hershey has been moving some of the industry from the United States to many other countries, such as China and Mexico. They have cut over three thousand jobs because of this, and many people in Hershey, Pennsylvania, have been left disgruntled because of all the job cuts over the past few years.^[35]

Product recalls

• In November 2006, the Smiths Falls production plant in Ontario, Canada temporarily shut down and several products were voluntarily recalled after concerns over salmonella contamination possibly found in soy lecithin within their production line. It is believed that most of the products involved in the recall never made it to the retail level.^[36][37]

• In July 1998, a number of 100-gram milk chocolate bars were recalled because they may have contained traces of almonds not listed in the ingredients. The chocolate bars were sold for fund-raising events.^[38]

See also

• Milton S. Hershey
• List of products manufactured by The Hershey Company
• Big Chocolate
• H. B. Reese
• Hershey Creamery Company (not related to the Hershey Company)
• Hershey, Pennsylvania

References

• Brenner, Joël Glenn (2000). The Emperors of Chocolate: Inside the Secret World of Hershey & Mars. Broadway Books. ISBN 0-7679-0457-5. 

External links

• Official Hershey's chocolate and candy site
• Official Hershey corporate site
• Hershey Canada