The Hershey Company

The Hershey Company

The original Hershey's chocolate factory, 1976
Type	Public
Traded as	NYSE: HSY S&P 500 Component
Industry	Food
Founded	February 9, 1894 (1894-02-09) (as Hershey Chocolate Company) Lancaster, Pennsylvania, U.S.[1]
Founder	Milton S. Hershey
Headquarters	Hershey, Pennsylvania, United States
Area served	Worldwide
Key people	Michele Buck (President and CEO)[2]
Products	List of products manufactured by The Hershey Company
Revenue	US$7.421 billion[3] (2014)
Operating income	US$1.389 billion[3] (2014)
Net income	US$846 million[3] (2014)
Total assets	US$5.629 billion[3] (2014)
Total equity	US$1.519 billion[3] (2014)
Owner	Hershey Trust Company
Number of employees	14,800[3] (2014)
Website	www.hersheys.com/en_us/home.html

The Hershey Company, known until April 2005 as the Hershey Foods Corporation^[4] and commonly called Hershey's, is one of the largest chocolate manufacturers in North America. 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 60 countries worldwide.^[5][6] In addition, Hershey is a member of the World Cocoa Foundation. It is also associated with the Hersheypark Stadium and the Giant Center.

History

The Hershey's Chocolate World store in Times Square, New York City (2008)

Hershey's Syrup, circa 1950s

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

Early years

After an apprenticeship to a confectioner in 1873, Milton S. 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.^[7] 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,^[8] 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^[8] (equal to $28,788,000 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. 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 of Derry Church, Pennsylvania, which later came to be known as Hershey, Pennsylvania.^[8] 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, he introduced a new candy, bite-sized, 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.^[8] 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), semisweet 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' International 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 20% interest in the confection, which used Hershey chocolate during the rationing era during World War 2. In 1948, Mars bought out Murrie's interest and became one of Hershey's main competitors.^[9]

21st century

In June 2006, 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.^[10]

In September 2006, ABC News 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, about 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."^[11]

In April 2014, the Hershey chocolate plant on East Chocolate Avenue in Hershey Pennsylvania was demolished to make way for mixed-use development.^[12]

A 2016 attempt to sell Hershey to Mondelez International was scuttled because of objections by the Hershey Trust.^[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 2005, Krave Jerky was founded by Jon Sebastiani after he trained for a marathon and looked for a healthy source of energy.^[17] Alliance Consumer Growth, a private equity group, invested in Krave Jerky in 2012.^[18] Hershey's purchased the company in 2015 for $240 million.^[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 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. That license would be revoked and revert to Nestlé if Hershey is sold.^[13] 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. By 2001, though, 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. 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 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 company's first foray outside of the confectionery market in more than a decade.^[33]

In 2016, Hershey acquired barkTHINS, a New York-based chocolate snack foods company which expected to generate between $65 million and $75 million in revenue for that year, for $290 million.^[34][35]

Hershey's chocolate is available across the United States, due to their wide network of distribution.^[36] They have three mega distribution centers, with modern technology and labor management systems.^[37]

Product recalls

• In November 2006, the Smiths Falls production plant in Ontario 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.^[38][39]
• In July 1998, a number of 100 g (3.5 oz) milk chocolate bars being sold for fundraising events were recalled because they may have contained traces of almonds not listed in the ingredients.^[40]

Philanthropy

Hershey has made large contributions to education. One of their most notable contributions was the Elizabethtown College Honors Program.^[41] 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.^[42]

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.^[43] 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.^[44]

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.^[45] 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."^[45] The same day, Hershey's announced, "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."^[46]

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

• • Business data for The Hershey Company: Google Finance
  • Yahoo! Finance
  • Reuters
  • SEC filings