“Gummy represents a huge opportunity,” CEO Michele Buck told analysts gathered at the Consumer Analyst Group of New York’s annual meeting last week.
With a three-year retail sale compound annual growth rate of 18%, gummy is the fastest growing sweets segment, according to Circana data. For the three years ending Oct. 29, 2023, gummy was growing 5 percentage points faster than rope, twice as fast as chewy and more than 10 percentage points faster than novelty and hard candies.
To capitalize on this opportunity, Buck said she is “thrilled that this year we are increasing our capacity on gummy by 50%,” which will allow Hershey “to have more SKUs on our core business at retail,” and innovate new forms and new flavors.
To help ensure the new products not only taste great but also deliver the fun consumers want from confections, Hershey is partnering with O’Neal, who Buck described as a “longstanding legend who continues to reinvent himself and draw in new fans,” and as someone who “literally has his own fun house.”
She explained that the partnership will allow Hershey to “leverage Shaquille’s big personality and his big kid enthusiasm for everything fun,” which “we think our consumers will enjoy.”
She added he has “tremendous connectivity with consumers – especially young, diverse consumers who are our key target on the gummy segment.”
Hershey plans to 'lead with Reese'
While Hershey and Shaq shoot for success in the gummy category, the company also plans to “lean into our mothership brand, Reese,” with innovation, stepped up marketing and increased supply capacity.
Last November, the company debuted Reese’s Caramel, a classic peanut butter cup with an added layer of caramel – the idea for which came from consumers. The new product was featured in a Super Bowl ad earlier this month, which helped raise awareness of and demand for the product.
“We have invested increasing the capacity on Reese by 30% just to meet our current volume that we have on Reese, because we’ve seen such strong growth,” Buck said.
To further drive growth, she said the company has “upped the budget” for the brand and improve its media targeting, which helped it increase impressions by 40%.
“We will continue to drive incremental merchandising on Reese as we really invest behind some of our big properties: the Super Bowl, March Madness and the Olympics,” she added.
Winning in store is ‘critical’
To better support all its confection brands, Hershey is focused on improving the display and availability of its sweets in-store, which Buck says is “absolutely critical” given the category’s impulse purchase positioning.
Working closely with retailers, Buck says that Hershey is “evolving” how its products are positioned in check-out areas to increase engagement.
“The work that we have done has actually led to a 20% increase in purchase conversion” in transaction zones, she said.
The brand also is leaning into in-store displays for holidays, seasons and celebrations to boost awareness and sales, and it is “adapting to consumers’ ever-changing behaviors and making sure that we have opportunities for add-on items when consumer are coming to pick-up locations to get their groceries,” Buck said.
