Hershey SWOT Analysis

Before we dive deep into the SWOT analysis, let us get the business overview of Hershey. The Hershey Company, founded in 1894 by Milton S. Hershey, is a leading global confectionery and snack company headquartered in Hershey, Pennsylvania, United States. 

Hershey is known for making more moments of goodness through chocolate, sweets, mints, and other great-tasting snacks. Hershey is the largest producer of quality chocolate in North America, a leading snack maker in the United States, and a global leader in chocolate and non-chocolate confectionery. Hershey markets, sells, and distributes its products under over 100 brands in approximately 80 countries. Hershey’s principal product offerings include:

• Chocolate and non-chocolate confectionery products.
• Gum and mint refreshment products and protein bars.
• Pantry items, such as baking ingredients, toppings, and beverages.
• Snack items include spreads, bars, snack bites and mixes, popcorn, and pretzels.

Hershey reports its operations through three segments:

1. North America Confectionery – This segment is responsible for the traditional chocolate and non-chocolate confectionery market position in the United States and Canada. This includes Hershey’s business in chocolate and non-chocolate confectionery, gum and refreshment products, protein bars, spreads, snack bites, mixes, and pantry and food service lines. This segment also includes Hershey’s retail operations, including Hershey’s Chocolate World stores in Hershey, Pennsylvania; New York, New York; Las Vegas, Nevada; Niagara Falls (Ontario) and Singapore, as well as operations associated with licensing the use of certain of the Company’s trademarks and products to third parties around the world.
2. North America Salty Snacks – This segment is responsible for our salty snacking products in the United States. This includes ready-to-eat popcorn, baked and trans-fat-free snacks, pretzels, and other snacks.
3. International – International combines all other operating segments that are not individually material, including those geographic regions where we operate outside North America. Hershey currently has operations in Mexico, Brazil, India, and Malaysia, primarily for consumers in these regions, and also distributes and sells confectionery products in export markets of Asia, Latin America, the Middle East, Europe, Africa, and other regions.

Business Strategy: Hershey’s business strategy is centered on expanding its product portfolio, strengthening its core brands, and pursuing growth through strategic acquisitions and global expansion. The Company focuses on continuous innovation and developing new products to cater to ever-changing consumer preferences and tastes.

Financial Performance 2023: 

• Consolidated net sales of $11,165.0 million, an increase of 7.2%.
• Organic, constant currency net sales increased 7.0%.
• Reported net income of $1,861.8 million, or $9.06 per share-diluted, an increase of 13.8%.
• Adjusted earnings per share-diluted of $9.59, an increase of 12.6%.

Here is a SWOT analysis for Hershey:

A SWOT analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of a business, project, or individual. It involves identifying the internal and external factors that can affect a venture’s success or failure and analyzing them to develop a strategic plan. In this article, we do a SWOT Analysis of Hershey.

SWOT Analysis: Meaning, Importance, and Examples

Strengths

1. Strong brand portfolio: Hershey’s boasts a diverse and robust portfolio of well-known brands such as Hershey’s, Reese’s, Kit Kat, and York, among others. These popular brands have helped the Company establish a strong market presence and customer loyalty.
2. Market leadership: Hershey’s is the leading chocolate manufacturer in the United States, with a dominant market share. The Company’s strong brand recognition and extensive product portfolio have enabled it to maintain its leadership position in the industry.
3. Vast distribution network: The Company’s extensive distribution network spans over 80 countries. This global reach allows Hershey’s to tap into various markets and cater to diverse consumer tastes and preferences.
4. Continuous innovation: Hershey’s is committed to innovation, consistently introducing new products and flavors to meet changing consumer demands. This innovation ability helps the Company stay relevant and competitive in the marketplace.
5. Strategic acquisitions and partnerships: Hershey’s has successfully expanded its product offerings and market presence through strategic acquisitions and partnerships. These moves have allowed the Company to diversify its portfolio and enter new markets, such as snacks, gum, and mints.
6. Financial stability: The Hershey Company has consistently performed, increasing revenues, profits, and shareholder value. This financial stability enables the Company to invest in growth initiatives, research and development, and marketing efforts.
7. Commitment to sustainability and social responsibility: Hershey’s strong commitment to ethical sourcing, environmental sustainability, and social responsibility has enhanced its reputation among consumers and stakeholders. These efforts not only demonstrate corporate responsibility but also help ensure the long-term viability of its supply chain.

Weaknesses

1. Overreliance on the U.S. market: A significant portion of Hershey’s revenue is generated in the United States, making the Company susceptible to fluctuations in the U.S. economy and changing consumer preferences in the country.
2. Limited product diversification: Although Hershey has expanded into snacks, gum, and mints, most of its revenue still comes from chocolate and confectionery products. This limited diversification makes the Company more vulnerable to changes in consumer tastes or health trends that may negatively affect the demand for chocolate.
3. Supply chain vulnerabilities: Hershey’s depends on a relatively small number of suppliers for key raw materials like cocoa, sugar, and milk. This dependency makes the Company vulnerable to supply chain disruptions, such as adverse weather conditions, political instability, or price fluctuations in raw materials.
4. Intense competition: The confectionery and snack industry is highly competitive, with numerous well-established players such as Mars, Nestlé, and Mondelez International. This fierce competition can result in pricing pressure, reduced market share, and the need for increased marketing expenditures.
5. Health concerns and changing consumer preferences: Demand for chocolate and sugar-based products may decline as consumers become increasingly health-conscious and opt for healthier food options. Hershey’s heavy reliance on these products may limit its growth potential in the face of changing consumer preferences.
6. Potential reputational risks: The chocolate industry has faced criticism for its connection to issues such as child labor, deforestation, and unfair trade practices in cocoa-producing countries. Although Hershey has tried to address these issues, any negative publicity or failure to meet ethical and sustainability standards could harm the Company’s reputation and consumer trust.
7. Slow international growth: While Hershey has a strong presence in the United States, its growth in international markets has been comparatively slow. The Company faces challenges such as local competition, cultural differences, and regulatory barriers that can limit its international expansion efforts.

Opportunities

1. Expanding product portfolio: Hershey can capitalize on the growing demand for healthier and diverse food options by developing new products in categories such as organic, sugar-free, and plant-based alternatives. This expansion will help the Company cater to changing consumer preferences and tap into new market segments.
2. International growth: There are significant opportunities for Hershey to expand its presence in emerging markets like Asia, Africa, and Latin America. These markets have growing middle-class populations with increasing disposable incomes, leading to higher demand for confectionery and snack products.
3. Strategic acquisitions and partnerships: Hershey can continue pursuing strategic acquisitions and partnerships to diversify its product offerings, enter new markets, and access new technologies and distribution channels.
4. Enhancing e-commerce and digital presence: With the growth of online shopping, Hershey can invest in strengthening its e-commerce capabilities and digital marketing efforts to reach better and engage customers across various platforms.
5. Sustainability and social responsibility initiatives: Hershey can continue building on its commitment to sustainability and social responsibility by investing in ethical sourcing, environmentally-friendly practices, and social initiatives. These efforts enhance the Company’s reputation, help secure its supply chain, and cater to consumers who prioritize ethical and sustainable products.
6. Personalization and customization: Hershey can explore opportunities to offer personalized and customized products that cater to individual preferences and dietary requirements. This can help the Company differentiate itself in a competitive market and strengthen customer loyalty.
7. Research and development: Investing in research and development can help Hershey stay at the forefront of industry trends and develop innovative products and processes that meet the evolving demands of consumers and retailers.
8. Strengthening supply chain resilience: By diversifying its supply base and implementing risk management strategies, Hershey can enhance the resilience of its supply chain, reducing the risk of disruptions and ensuring the long-term availability of key raw materials.

Threats

1. Intense competition: Hershey operates in a highly competitive industry with well-established players such as Mars, Nestlé, and Mondelez International. This fierce competition can lead to pricing pressure, reduced market share, and increased marketing expenditures.
2. Health concerns and changing consumer preferences: The growing health consciousness among consumers and the shift towards healthier food options threaten the demand for chocolate and sugar-based products. Hershey’s reliance on these products makes it vulnerable to these changing consumer preferences.
3. Fluctuations in raw material prices: Hershey depends on raw materials such as cocoa, sugar, and milk, whose prices can be volatile due to adverse weather conditions, political instability, or supply-demand imbalances. Fluctuations in these prices can negatively impact the Company’s production costs and profit margins.
4. Regulatory and compliance risks: The food industry is subject to strict regulations regarding food safety, labeling, advertising, and environmental practices. Changes in these regulations or failure to comply with them can result in fines, legal actions, and damage to the Company’s reputation.
5. Supply chain disruptions: Hershey’s supply chain can be disrupted by various factors, such as natural disasters, geopolitical tensions, and pandemics. These disruptions can lead to shortages of raw materials, increased costs, and production delays, which can negatively impact the Company’s operations and financial performance.
6. Currency fluctuations: As a global company, Hershey is exposed to fluctuations in foreign currency exchange rates. These fluctuations can affect the Company’s revenues and profitability, particularly in international markets.
7. Cybersecurity risks: As Hershey expands its digital presence and relies on technology for its operations, the Company becomes more vulnerable to cybersecurity threats, such as data breaches and cyber-attacks. These incidents can lead to financial losses, legal liabilities, and damage to the Company’s reputation.
8. Reputational risks related to ethical and sustainability concerns: The chocolate industry has faced criticism for its connection to issues such as child labor, deforestation, and unfair trade practices in cocoa-producing countries. Failure to address these issues or meet ethical and sustainability standards can result in negative publicity and harm the Company’s reputation, potentially affecting consumer trust and sales.

Check out the SWOT Analysis of Global Businesses