The Hershey Company

The Hershey Company

The original Hershey's chocolate factory, from 1976
Type	Public
Traded as	NYSE: HSY S&P 500 Component
Industry	Food
Founded	Lancaster, Pennsylvania, United States (February 9, 1894 (1894-02-09))[1]
Founder	Milton S. Hershey
Headquarters	Hershey, Pennsylvania, United States
Area served	Worldwide
Key people	John Bilbrey (President and CEO)
Products	List of products manufactured by The Hershey Company
Revenue	US$7.421 billion[2] (2014)
Operating income	US$1.389 billion[2] (2014)
Net income	US$846 million[2] (2014)
Total assets	US$5.629 billion[2] (2014)
Total equity	US$1.519 billion[2] (2014)
Owner	Hershey Trust Company
Number of employees	14,800[2] (2014)
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 and increasingly elsewhere throughout the world.^[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 over sixty countries worldwide.^[4][5] In addition, Hershey is a member of the World Cocoa Foundation. It is also associated with the Hersheypark Stadium and the Giant Center.

Hershey Store located in the Falls Avenue Entertainment Complex in Niagara Falls, Canada

Hershey's Times Square Store, Times Square, New York City (2008)

Hershey's Syrup, circa 1950s

History

Early years

After completing an apprenticeship to a confectioner in 1873, Hershey founded a candy shop in Philadelphia. This candy shop was only open for six years, after which Hershey apprenticed with another confectioner in Denver, where he learned to make caramel.^[6] After another failed business attempt in New York, Hershey returned to Pennsylvania, where in 1886 he founded the Lancaster Caramel Company. The use of fresh milk in caramels proved successful,^[7]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^[7] (equal to $28,444,000 today), and began to concentrate on chocolate manufacturing, stating to people who questioned him "Caramels are just a fad, but chocolate is a permanent thing."

In 1896 Milton built a milk-processing plant so he could create and refine a recipe for milk chocolate candies. In 1899 he developed the Hershey process which is less sensitive to milk quality than traditional methods, and in 1900 he began manufacturing Hershey's Milk Chocolate Bars, also called Hershey's Bars or Hershey Bars.

Hershey's Cocoa ad from 1918.

Hershey, Pennsylvania

In 1903 Hershey began construction of a chocolate plant in his hometown, Derry Church, Pennsylvania, which later came to be known as Hershey, Pennsylvania.^[7] The town was an inexpensive place for the workers and their families to live. Milton treated the people well and provided leisure activities to make sure the citizens enjoyed themselves. The milk chocolate bars manufactured at this plant proved popular, and the company grew rapidly.

Hershey's Kisses

In 1907 Hershey introduced a new candy, bite-size flat-bottomed conical-shaped pieces of chocolate that he named "Hershey's Kiss". Initially they were individually wrapped by hand in squares of aluminum 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.^[7] Today 80 million of the candies are produced each day. Other products introduced included Mr. Goodbar (1925), containing peanuts in milk chocolate, Hershey's Syrup (1926), semi-sweet chocolate chips (1928), and the Krackel bar containing crisped rice (1938).

Labor troubles

Labor unrest came to Hershey in the late 1930s as a Congress of Industrial Organizations-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.

M&M's

Shortly before World War II, Bruce Murrie, son of long-time Hershey's president 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 a 20% interest in the confection, which used Hershey chocolate during the rationing era during World War II. In 1948 Mars bought out Murrie's interest and became one of Hershey's main competitors.^[8]

21st century

In 2007 the Chocolate Manufacturers Association in the United States, whose members include Hershey, Nestlé, and Archer Daniels Midland, lobbied the U.S. 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]

Reese's Peanut Butter Cups

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, and by 1925 he had developed an assortment of candies which he sold to department stores in Lancaster, Pennsylvania, advertised as "made in Hershey." In 1926 he built his own factory, and in 1941 with the wartime rationing of sugar, Reese focused all of his production resources on his own confectionery specialty, Reese's Peanut Butter Cups, 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.^[14]

Cadbury's

In 1988 Hershey's acquired the rights to manufacture and distribute many Cadbury-branded products in the United States (except gum and mints, which are part of Mondelēz International). In 2015 they sued a British importer to halt imports of British Cadbury chocolate, angering consumers.^[15][16]

Krave Jerky

In 2009 Krave Jerky was founded by Jon Sebastiani after he trained for a marathon and looked for a healthy source of energy.^[17] The company was purchased by the Hershey Company in 2015.^[18]

Milton Hershey School (MHS)

Unable to have children of his own, Milton S. Hershey founded the Milton Hershey School in 1909 for orphans. In 1918, Milton S. Hershey and his wife, Catherine Hershey, donated all of their considerable wealth, of around 60 million dollars, to the boarding school upon Catherine Hershey's death. The Hershey Trust Company is now the largest shareholder and beneficiary to the School. Before his death, Milton Hershey ensured the school would live on by donating 30% of all future Hershey profits to the school. Due to this generous donation by America's largest chocolate company, MHS now has over 7 billion dollars in assets, making it one of the richest schools in the world. Today, the Milton Hershey School provides free education, health care, counseling and a friendly home to 2000 orphans in financial need. The school's programs include sports, arts, religious studies, sciences, math, language and many other subjects. School colors are gold and brown. Students must wear a uniform to class provided to them by the School to encourage equality. Their admissions is primarily based on age and financial need for the orphans. The school also provides "House Parents", which are hired couples, paid to take care of and nurture the students. The school's "fellowship" project provides students with Hershey employee visits to build long lasting relationships and provide career counseling. Additionally, the school is located in Hershey, Pennsylvania, a city created by Milton Hershey himself. The city offers security, a church, a post office and other services for the students. Many of its designs resemble Hershey chocolate products, such as the Hershey Kisses light posts. Most notably perhaps is the fact that Mr. Milton Hershey prohibited The Hershey Company from using the School as an advertisement or marketing strategy. The school's primary goal is to provide young orphans with the skills necessary to support themselves and their families in the future.

Manufacturing plants

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.^[19] In February and April 2007 Hershey's announced that their Smiths Falls^[20][21] and Oakdale^[22][23] plants would close in 2008, being replaced in part by a new facility in Monterrey, Mexico. The Oakdale factory closed on February 1, 2008.^[24] 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,^[25] and later in California following the September 11, 2001 attacks, due to security concerns.^[23]

On September 18, 2012, Hershey opened a new and expanded West Hershey plant. The plant was completed at a budget of $300 million.^[26]

Other sales and acquisitions

In 1969, Hershey received a license from Rowntree's to manufacture and market Kit Kat and Rolo in the United States. As of September 2013, 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 (now part of Pfizer),^[27] and Luden's eventually became a product of Prestige Brands.^[28] 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 (except gum and mints, which are part of Mondelēz International). In 1996, Hershey purchased the American operations of the Leaf Candy Company from Huhtamäki.

In 1999, the Hershey Pasta Group was divested to several equity partners to form the New World Pasta company (now part of Ebro Foods).

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 (now part of Mars Incorporated) were removed by Attorney General Fisher and Judge Morgan.^[29] 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 was to be sold, the rights to make and market Kit Kat and Rolo products in the U.S. would have reverted to Nestlé.

In December 2004, Hershey acquired the Mauna Loa Macadamia Nut Corp. from The Shansby Group.^[30]

In July 2005, Hershey acquired the Berkeley, California based boutique chocolate-maker Scharffen Berger.^[31] 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.

In December 2011, Hershey reached an agreement to acquire Brookside Foods Ltd., a privately held confectionery company based in Abbotsford, British Columbia.^[32]

In 2015, Hershey announced that they had acquired Krave Jerky, marking the companies first foray outside of the confectionery market.^[18]

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]

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.^[35][36]
• In July 1998, a number of 100 g (3.5 oz) milk chocolate bars being sold for fund raising events were recalled because they may have contained traces of almonds not listed in the ingredients.^[37]

Philanthropy

Hershey has made large contributions to education. One of their most notable contributions was the Elizabethtown College Honors Program.^[38] The program was established in 1999 and is funded partially through the endowment.

In 2015, Hershey announced a commitment with Clinton Global Initiative to help build a sustainable supply chain to support basic nutrition for children in Ghana.^[39]

Criticism

Cocoa Purchase

Hershey has been criticized for not having programs to ensure sustainable and ethical cocoa purchase, lagging behind its competitors in fair trade measures.^[40] 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.^[41]

The "Raise the Bar, Hershey!" campaign was launched in September 2010 by Global Exchange, Green America. the Oasis Trust, and the International Labor Rights Forum. The purpose of the Raise the Bar Campaign is to pressure Hershey to commit "to take immediate action to eliminate forced and child labor … from Hershey’s cocoa supply"; "to sourcing 100% Fair Trade Certified™ cocoa beans by 2012 for at least one of its top five selling chocolate bars … making at least one additional top five selling bar 100% Fair Trade Certified™ every two years thereafter"; and that "the majority of Hershey’s cocoa across all products will be Fair Trade Certified™ by 2022." Pressure was particularly directed at Whole Foods Market, which announced on October 3, 2012 that it would cease carrying Hershey's Scharffen Berger line.^[42] The Campaign stated that "Whole Foods’ decision follows more than 40 natural food retailers and coops publicly expressing concern about carrying Scharffen Berger and Dagoba products as a consequence of the giant chocolate maker’s refusal to address child labor in its supply chain."^[42] The same day, Hershey's announced that "it will source 100 percent certified cocoa for its global chocolate product lines by 2020 and accelerate its programs to help eliminate child labor in the cocoa regions of West Africa."^[43]

Use of foreign student labor

In August 2011, the main distribution center for Hershey candies was subjected to a strike by about 400^[44] 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 Exel based in Ohio.^[45] Exel 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).^[46]

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!^[46]

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.^[47] One said, "I spent some of the worst moments of my life during that exchange."^[48]

In February 2012, press reports indicated that the Occupational Safety and Health Administration fined Exel $283,000. The company failed to report 42 serious injuries in the period from 2008 to 2011. The agency found that Exel had deliberately failed to meet reporting requirements. Hershey spokesmen pointed out the Hershey Corporation was not cited, just the company they hired to run its operations in the Hershey-owned facility.^[49]

In November 2012, the federal government fined the three contractors $143,000 and charged them for unpaid wages, an amount totaling $356,000. The Hershey company refused to answer questions concerning the settlement, only referring reporters to the contractors.^[50]

Lawsuit over Importation of British Chocolate

Hershey's filed a lawsuit against Let's Buy British Imports, and Posh Nosh Imports because of the aforementioned companies importation of Nestlé's Yorkie, and Toffee Crisp, for Hershey's claim of alleged resemblance to York Peppermint Patties and Reese's Peanut Butter Cups, respectively; despite the fact that Hershey's and Nestlé's respective products are different types of candy. Hershey also claimed that import of original British Rolo by Nestlé violated its licensed rights to the Rolo brand in the US, and sought the end of importation of Rolo into the US.

Hershey's also sought the halting of the importation of British, South African, Canadian, Australian, New Zealander, and all other Cadbury brand chocolate other than Hershey's licensed chocolate product produced in the US and marketed under the Cadbury brand name. Hershey's claimed that the importers, LBB Importers and Posh Nosh, were infringing on their rights to the Cadbury brand name in the US due to their licensing agreement with Cadbury, a division of Mondelez.

In addition, Hershey's claimed that the two importers needed to stop importing Mars's Maltesers malted milk balls because Hershey's makes their own malted milk balls under the Maltesers name. Hershey's itself has been sued by Mars for violating Mars' trademark and rights to Maltesers, Mars has said that Hershey's has copied Maltesers brand, packaging, and products; that lawsuit has not settled as of 16 February 2015.

In January 2015, Hershey's lawsuit against Let's Buy British Imports and Posh Nosh Imports was dropped, and the two importers agreed to stop importing non-licensed original Cadbury chocolate, Nestlé's Yorkie chocolate and Toffee Crisp, and Maltesers. This decision was immediately met with immense backlash and controversy against Hershey. Many people said that they would no longer purchase Hershey's products, as many believe that the taste of British chocolate such as Cadburys etc. was much superior to that of American chocolate such as Hershey's in particular and many called for a boycott of Hershey's products. A petition protesting Hershey's lawsuit has gained over 35,000 signatures as of 16 February 2015. An owner of a 7/11 in a Boston neighborhood with heavy Irish immigrant presence said that he would stop carrying Hershey products in his store, as have other stores across the country. Some people purchased hundreds of the mentioned products with news of the lawsuit. The lawsuit does not prevent other importers of the chocolates from importing them as they were not mentioned in the lawsuit.

See also

Wikimedia Commons has media related to Hershey Company.

• List of products manufactured by The Hershey Company
• List of food companies
• Pennsylvania chocolate workers' strike, 1937

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

Wikimedia Commons has media related to Hershey Company.

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