Until now, Hershey has been mainly reliant on the North American confectionery market, with international sales making up only 14 per cent of Hershey’s total revenues of $5.3bn last year.
However, since 2009 Hershey has shown signs of its plans to target Europe, Ildiko Szalai, company analyst for Euromonitor told ConfectioneryNews.com.
In August, the company established a European subsidiary in London and last year it emerged as a potential bidder for Cadbury.
Targeting Europe
Szalai said that although the bid wasn’t successful, this demonstrated the company’s intentions for further European growth.
According to press reports, Asda, the UK subsidiary of Walmart, and UK’s second largest supermarket, is to start selling Hershey products in the UK on an exclusive basis early next year.
Although some of Hershey’s products are already available in UK, the company has no significant distribution in Europe compared to privately-owned rival Mars.
In addition, the Financial Times (FT) reported this week that the chocolate maker is currently recruiting a manager for a European and Middle East travel retail business. The job will involve working to “develop routes to market” and “spearheading an increase in distribution and placement of Hershey’s products”.
Emerging Markets
The European push forms part of a broader drive by the company to expand its business outside of North America, focusing on Latin America and Asia.
Szalai said these regions can deliver more dynamic growth for the company than North America.
On the other hand, Europe is more affluent in terms of profit margins, she said, and may be one reason why Hershey is now has its sights on this new market too.
However, Szalai said the brand would face very strong competition from other European brands such as Cadbury, Mars, Nestle, Lindt and Ferrero.
According to the FT, Hershey wants to ensure the products exclude the genetically-modified (GM) ingredients it uses in the US, in response to continuing consumer concern over GM foods in Europe. Asda says that it does not sell products that include GM ingredients.
The Hershey Company is one of the largest producers of consumer chocolate in North America, it has operations throughout the world with more than 12,000 employees.