| Type | Public (NYSE: HSY) S&P 500 Component |
|---|---|
| Industry | Foods |
| Founded | Lancaster, Pennsylvania, United States (February 9, 1894)[1] |
| Founder(s) | Milton S. Hershey |
| Headquarters | Hershey, Pennsylvania, United States |
| Area served | Worldwide |
| Key people | John P. Bilbrey, (President and CEO) |
| Products | List of products manufactured by The Hershey Company |
| Revenue | US$5.671 billion (2010)[2] |
| Operating income | US$905 million (2010)[2] |
| Net income | US$510 million (2010)[2] |
| Total assets | US$4.273 billion (2010)[2] |
| Total equity | US$938 million (2010)[2] |
| Employees | 13,700 (2010)[2] |
| Website | hersheys.com |
The Hershey Company, known until April 2005 as the Hershey Foods Corporation[3] and commonly called Hershey's, is the largest chocolate manufacturer in North America.[4] Its headquarters are in Hershey, Pennsylvania, which is also 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 products are sold in about sixty countries worldwide.[5][4]
Hershey is one of the oldest chocolate companies in the United States, and an American icon for its chocolate bar. It is one of a group of companies established by Milton Hershey. Other Milton Hershey-established companies include Hershey Trust Company, and Hershey Entertainment and Resorts Company, which runs Hersheypark, a chocolate-themed amusement park, the Hershey Bears minor professional hockey team, Hersheypark Stadium and the GIANT Center. Most of the employees for the factory come from the surrounding counties, towns, and boroughs, such as Lebanon County, Hummelstown, South Hanover, and Harrisburg.
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After completing an apprenticeship to a confectioner in 1873, Milton Snavely Hershey founded a candy shop in Philadelphia, which failed six years later.[6] 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.[6] In 1900, Hershey sold his caramel company for $1,000,000[6] (equal to $26,312,000 today) and began to concentrate on chocolate manufacturing. In 1903, Hershey began construction of a chocolate plant in his hometown, Derry Church, Pennsylvania, which later came to be known as Hershey, Pennsylvania.[6] The milk chocolate bars manufactured at this plant proved successful, and the company grew rapidly.
Milton built a milk-processing plant in the year 1896, so he could create and refine a recipe for milk chocolate candies. In 1899, three years later, he developed the Hershey process which is less sensitive to milk quality than traditional methods.
In 1907, Hershey introduced a new candy, small flat-bottomed conical-shaped pieces of chocolate that he named "Hershey's Kiss". 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.[6] Now, 80 million of the candies are produced each day. Other products introduced included Mr. Goodbar, containing peanuts in chocolate, in 1925, Hershey's Syrup in 1926, semi-sweet dark chocolate chips in 1928, and the Krackel bar containing crisped rice in 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. 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 and then in 1941 with the wartime rationing of sugar, Reese focused all of his production resources on his own confectionery masterpiece, the peanut butter cup, which required less sugar than most other confections of the time. In 1956, Reese died, leaving the company to his six sons. In June 1963, Hershey Chocolate Corporation acquired Reese's company for $23.3 million at a time when Reese's sales were $14 million annually.[7]
Labor unrest came to Hershey in the late 1930s as a CIO-backed union attempted to organize the factory workers. A failed sit-down strike in 1937 ended in violence, as loyalist workers and local dairy farmers beat many of the strikers as they attempted to leave the plant. By 1940, an affiliate of the American Federation of Labor had successfully organized Hershey's workers under the leadership of John Shearer, who became the first President of Local Chapter Number 464 of the Bakery, Confectionery, Tobacco Workers, and Grain Millers Union. Local 464 still represents the Hershey workforce.
Shortly before World War II, Bruce Murrie, son of long-term president of Hershey's, William F.R. Murrie, struck a deal with Forrest Mars to create a hard sugar-coated chocolate that would be called M&M's (for Mars and Murrie). 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.[8]
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.[9] Currently, the Food and Drug Administration does not allow a product to be called "chocolate" if the product contains any of these ingredients.[10][11]
In December 2007, Philadelphia city councilman Juan Ramos called for Hershey's to stop marketing "Ice Breakers Pacs", a kind of mint, due to the resemblance of its packaging to a kind that was used for illegal street drugs.[12]
In September 2008, MSNBC reported that several Hershey chocolate products were reformulated to replace cocoa butter with vegetable oil as an emulsifier. According to the company, this change was made to reduce the costs of producing the products instead of raising their prices or decreasing the sizes. Some consumers complained that the taste was different, but the company stated that in the company-sponsored blind taste tests, approximately half of consumers preferred the new versions. As the new versions no longer met the Food and Drug Administration's official definition of "milk chocolate", the changed items were relabeled from stating they were "milk chocolate" and "made with chocolate" to "chocolate candy" and "chocolaty."[13]
The Hershey, Pennsylvania plant, covering 2,000,000 square feet (200,000 m2) of manufacturing space, is the largest chocolate factory in the world.[14]
The first plant outside Hershey, Pennsylvania opened on June 15, 1963 in Smiths Falls, Ontario, Canada and the third opened on May 22, 1965 in Oakdale, California.[15] In February and April 2007 Hershey's announced that their Smiths Falls[16][17] and Oakdale[18][19] plants would close in 2008, being replaced in part by a new facility in Monterrey, Mexico. The Oakdale factory closed on February 1, 2008.[20] Hershey chocolate factory in São Roque, Brazil was opened in August 2002.
Hershey also has plants in Stuarts Draft, Virginia; Lancaster, Pennsylvania; Hazleton, Pennsylvania; Memphis, Tennessee; Robinson, Illinois and Guadalajara, Mexico.
Visitors to Hershey, Pennsylvania can experience Hershey's Chocolate World visitors center and its simulated tour ride. Public tours were once operated in the Pennsylvania and California factories, which ended in Pennsylvania in 1973 as soon as Hershey's Chocolate World opened,[21] and later in California following the September 11, 2001 attacks, due to security concerns.[19]
In 1969, Hershey received a license from Rowntree's to manufacture and market Kit Kat and Rolo in the United States. As of March 2011, Hershey continued to make and market these brands in the U.S. under license from Nestlé, owners of the Rowntree brand.
In 1977, Hershey acquired Y&S Candies, founded in 1845, and became the 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. But by 2001, the brand had been sold to Pharmacia,[22] and Luden's eventually became a product of Prestige Brands.[23] Hershey's kept Luden's 5th Avenue bar. In 1988, Hershey's acquired the rights to manufacture and distribute many Cadbury-branded products in the United States. The Cadbury creme eggs sold in the United States are imported by Hershey from Cadbury in the United Kingdom.[24] In 1996, Hershey purchased the American operations of the Leaf Candy Company from Huhtamäki.
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. But over the following 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. If Hershey is sold, the rights to make and market Kit Kat and Rolo products in the U.S. would revert to Nestlé.
In December 2004, Hershey acquired the Mauna Loa Macadamia Nut Corp. from The Shansby Group.[25]
In July 2005, Hershey acquired the Berkeley, California based boutique chocolate-maker Scharffen Berger.[26] In November 2005, Hershey acquired Joseph Schmidt Confections, the San Francisco based chocolatier, and a year later, 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.[27] They have three mega distribution centers, with modern technology and labor management systems.[28]
Hershey has been criticized for not having programs to ensure sustainable and ethical cocoa purchase, lagging behind its competitors in fair trade measures.[32] Regarding Hershey's corporate practices, the Global Exchange report comments that:
Hershey has no policies in place to purchase cocoa that has been produced without the use of labor exploitation, and the company has consistently refused to provide public information about its cocoa sources. Additionally, Hershey has made no move to shift to third-party certification for the cocoa that it sources from West Africa. No information is available from Hershey about how the money it has invested in various programs in West Africa has actually impacted reductions in forced, trafficked, and child labor among the suppliers of its cocoa. Finally, Hershey's efforts to further cut costs in its cocoa production has led to a reduction in good jobs in the United States.[33]
In October 2011, a discrimination lawsuit was filed against Milton Hershey School, connected with the Hershey company, for allegedly denying admission to an honors student because he was HIV positive.[34]
In August 2011, the main distribution center for Hershey candies was subjected to a strike by about 400[35] young foreign workers brought to the United States under the J1 "cultural exchange" visa program. The center in Palmyra, Pennsylvania was run for Hershey by Excel Logistics based in Ohio.[36] Excel in turn subcontracted the staffing of the center to another firm SHS OnSite Solutions based in Lemoyne, Pennsylvania. The students were recruited by yet another organization called the Council on Educational Travel (CETUSA).[37]
To the students, CETUSA promised:
You will gain valuable work and life experience, expand your resume, improve your English, have opportunity to travel in the U.S., make great memories and form lasting relationships. No matter where you end up in the U.S., your Work and Travel Program is sure to be a summer you will never forget![37]
The students paid CETUSA up to $6,000 to participate in the program. The students came from countries such as Costa Rica, China, Mongolia, Kazakhstan, Moldova, Poland, and Romania.[38] One said, "I spent some of the worst moments of my life during that exchange." [39]
As the strike made national news, Hershey pressured its contractors to provide the students with a week of paid vacation to allow them to see America. Hershey, Excel, SHS OnSite Solutions and CETUSA all removed any mention of the strike from their web sites.