The Hershey Company (HSY) BCG Matrix Analysis

Welcome to this informative blog about The Hershey Company's products and brands. As one of the largest confectionery companies in the world, Hershey's has a diverse portfolio of products that fall into different categories of the Boston Consulting Group Matrix Analysis. In this blog, we will take a closer look at Hershey's 'Stars', 'Cash Cows', 'Dogs', and 'Question Marks'. Read on to find out more about these products and how they impact the Hershey Company's success!

Background of The Hershey Company (HSY)

The Hershey Company (HSY) is an American multinational company that produces and sells chocolates, candy, and other snacks. Founded by Milton Hershey in 1894 in Pennsylvania, the company has grown to become a leading manufacturer of confectionery products worldwide.

In 2021, the Hershey Company reported net sales of $8.14 billion, which represented an increase of 2.5% from the previous year. The company's net income for the year was $1.05 billion, up by 7.4% compared to the previous year. In the first quarter of 2022, Hershey reported net sales of $2.3 billion, which was a 5.5% increase from the same quarter in the previous year.

The company has a diversified product portfolio that includes some of the most recognizable brands in the confectionery industry, such as Hershey's, Reese's, KitKat, and Twizzlers. Hershey's products are sold in over 60 countries, and the company employs over 17,000 people worldwide.

HSY has focused on sustainability, and in 2021, it was recognized as one of the world's most ethical companies for the ninth consecutive year by the Ethisphere Institute. Additionally, the company has set several sustainability targets, such as achieving 100% responsibly sourced cocoa by 2020.

Hershey Company's Business Segments

The Hershey Company is organized into two primary business segments:

• North America: This segment includes sales from the United States and Canada. The North America segment is responsible for the majority of the company's net sales, accounting for 84% of total sales in 2021.
• International & Other: This segment includes sales from all other countries outside of North America and other miscellaneous items.

While the North America segment is significantly larger than the International & Other segment, the latter has been growing at a faster rate. In 2021, the segment's net sales increased by 13.5% compared to the previous year, while the North America segment's net sales increased by 1.5%.

The Hershey Company has been expanding its international business over the years, and in 2021, the International & Other segment accounted for 16% of the company's net sales.

The Hershey Company (HSY) Stars

In the year 2023, The Hershey Company has a variety of products that could be considered 'stars' in the market. These products have a high market share and are expected to continue to grow in the future. Some of Hershey's 'stars' as of 2023 are:

• Reese's - Reese's is a brand of peanut butter cups that has been a favorite of American consumers for decades. As of 2022, Reese's had a market share of 40% in the United States.
• Kit Kat - Kit Kat is a chocolate bar that is sold around the world. As of 2022, Kit Kat was the best-selling chocolate bar in Japan and had a market share of 12% in the United States.
• Hershey's Milk Chocolate - Hershey's Milk Chocolate is the flagship brand of The Hershey Company. As of 2022, it had a market share of 22% in the United States.
• Ice Breakers - Ice Breakers is a brand of sugar-free mints and gum that has gained popularity over the years. As of 2022, it had a market share of 18% in the United States.

These 'stars' represent a significant portion of The Hershey Company's revenue and are expected to continue to grow in the future. The company will need to invest in these brands to maintain their success and prevent them from becoming 'cash cows'.

The financial information of these brands is also important to consider. For instance, in the year 2022, Reese's generated revenues of $2.6 billion, which is a 6% increase from the previous year. Kit Kat, on the other hand, had sales of $2.1 billion in 2022, which is a 4% increase from the previous year. Hershey's Milk Chocolate had sales of $2 billion in 2022, which is a 2% increase from the previous year. Lastly, in the year 2022, Ice Breakers generated revenues of $800 million, which is a 7% increase from the previous year.

To sum it up, The Hershey Company has a strong portfolio of products, with several brands that can be considered 'stars' in the market. These brands have a high market share and are expected to continue to grow in the future. Investing in these brands will be crucial for The Hershey Company to maintain its success and prevent them from becoming 'cash cows'.

The Hershey Company (HSY) Cash Cows

As of 2023, The Hershey Company (HSY) has several 'cash cows' products and/or brands under its portfolio. These products have achieved significant market share in a mature market and generate high profit margins and cash flow. The following are the 'cash cows' of HSY:

• Hershey's Chocolate Bars: With over $1.3 billion in sales in 2022, Hershey's Chocolate Bars continue to be one of the leading products in the chocolate segment. The brand has maintained its high market share due to its iconic taste and brand recognition.
• Reese's Peanut Butter Cups: This chocolate and peanut butter combination is a classic favorite that has captured the hearts of many. In 2022, Reese's Peanut Butter Cups generated over $2.5 billion in sales alone, making it a significant cash cow for HSY.
• Kisses: The bite-sized chocolate candy has been a staple for Hershey's lovers since 1907. With over $900 million in sales in 2022, Kisses continue to be a significant cash cow for HSY and a symbol of love and appreciation for millions worldwide.

HSY continues to invest in its cash cows to maintain and improve its efficiency and increase cash flow. Due to the low growth potential, HSY focuses its investments on supporting infrastructure rather than promotion and advertising efforts. These cash cows provide the necessary funds to turn a Question Mark into a market leader, cover administrative costs, fund research and development, pay dividends to shareholders, and service the corporate debt.

Overall, HSY's 'cash cows' play a critical role in maintaining the current level of productivity and profitability and will undoubtedly continue to do so in the future.

The Hershey Company (HSY) Dogs

As of 2023, The Hershey Company (HSY) has a few products/brands that have become Dogs. These markers have low growth rates and low market shares. The following are some of the brand names and products that belong to the Dogs quadrant:

• Mauna Loa: Mauna Loa is a brand of macadamia nuts that the Hershey Company acquired in 2005. As of 2023, this brand has become a Dog product and is generating low revenue for the company. In 2022, the statistical information shows that revenue generated by this product was $5 million dollars, which is less than 1% of the total revenue of the Hershey Company.
• Zagnut: Zagnut is another brand that has entered the 'Dogs' quadrant of the BCG Matrix Analysis. It is a chocolate-coated wafer that was first introduced in the 1930s. In 2022, the financial information shows that revenue generated by this product was $10 million dollars, which is less than 1% of the total revenue of the Hershey Company.
• Scharffen Berger: Scharffen Berger is a brand of premium chocolate that was acquired by the Hershey Company in 2005. However, as of 2023, this brand has become a Dog product and has not been generating a significant amount of revenue for the Hershey Company. In 2022, the financial data shows that revenue generated by this product was $15 million dollars, which is less than 1% of the total revenue of the Hershey Company.

Due to their low market share and low growth rates, it is recommended for the Hershey Company to avoid investing in these brands/products. The turn-around plans for these products are often expensive and might not substantially improve their market position.

The Hershey Company (HSY) Question Marks

The Hershey Company (HSY) has multiple products/brands which fall under the Question Marks quadrant of Boston Consulting Group Matrix Analysis as of 2023. These are the high growth products/brands with low market share and require immediate attention and investment to increase their market share to avoid becoming dogs.

One of the Question Marks products for Hershey Company is Brookside chocolates. Despite being very popular, Brookside chocolates have low market share compared to other chocolate brands, especially in the United States. According to the Hershey Company's 2022 annual report, the sales of Brookside chocolates were about $100 million, which is a significant increase from the $45 million sales in the previous year.

The Hershey Company's brand ' KIND' is another product that falls under the Question Marks quadrant. KIND is recognized and appreciated for its health-conscious products, but the brand's market share is relatively low. The latest financial report of 2023 shows that the KIND brand generated sales of around $150 million, which is an increase from the previous year's sales of $120 million. The company is investing heavily in KIND to gain more market share.

• Brookside chocolates: Sales of $100 million in 2022.
• KIND: Sales of $150 million in 2023.

The Hershey Company's BCG Matrix Analysis provides valuable insights into the company's product portfolio and their position in the market. The analysis helps the Hershey Company understand which products are performing well, which ones require immediate attention and investment, and which products should be avoided. By categorizing their products/brands into four different categories (Stars, Cash Cows, Dogs, and Question Marks), the Hershey Company can make informed decisions on how to allocate its resources effectively.

The 'stars' of the Hershey Company are products that have a high market share and are expected to continue growing. Among Hershey's stars are Reese's, Kit Kat, Hershey's Milk Chocolate, and Ice Breakers. These brands generate significant revenues for the company and require investment to maintain their success and prevent them from becoming 'cash cows.'

The 'cash cows' of the Hershey Company are products and brands that have achieved significant market share in mature markets. They generate high profit margins and cash flow. Among the Hershey Company's cash cows are Hershey's Chocolate Bars, Reese's Peanut Butter Cups, and Kisses. These products provide the necessary funds to cover administrative costs, fund research and development, pay dividends to shareholders, and service the corporate debt.

The 'dogs' of the Hershey Company are products and brands that have low growth rates and low market shares, which make them a burden for the company. Among the Hershey Company's 'dogs' are Mauna Loa, Zagnut, and Scharffen Berger. The company is advised against investing in these brands because turn-around plans are often expensive and might not substantially improve their market position.

The 'question marks' of the Hershey Company are products that have high growth potential but have low market shares. Among the Hershey Company's 'question marks' are Brookside chocolates and KIND. The company is investing heavily in these brands to gain more market share. They require immediate attention and investment to not become a 'dog.'

The Hershey Company's product portfolio analysis is critical to their success in the market. The analysis provides them with the information they need to make informed decisions regarding product investment, product development, and product withdrawal. By continuously monitoring their product portfolio and adjusting their strategies, the Hershey Company can maintain its position as a leading brand in the chocolate industry.