In the quarter ending Sept. 27, the company secured market share for chocolate upwards of 160 basis points and in sweets saw share gains of 30 basis points since the coronavirus pandemic began in large part by focusing on areas of its portfolio that resonated most with consumers stuck at home or looking for safe ways to engage with loved ones and the world around them during the pandemic, company president and CEO Michele Buck, told investors Nov. 5.
“Our core US business remains healthy, as consumers reach for small treats during the pandemic and they continue to celebrate important rituals in their lives,” such as movie nights at home, road trips, backyard gatherings and even Halloween, she said.
The company has been able to leverage these events despite parts of the country experiencing and reacting to the pandemic differently by tracking cases of COVID-19 cases by zip code and adjusting inventory and marketing messages to reflect ebbs and flows in disease and regional response, Buck explained.
“A great example of this has been our s’mores activation,” she noted. “Early on, our category management teams identified that zip codes with high COVID-19 cases were seeing a 40% to 50% increase in demand for our milk chocolate bars,” because “consumers were looking for safe, fun ways to spend time together outdoors and s’mores met that need.”
As such, the company crossed actual and projected COVID-19 cases by zip code with store level traffic and sales trends to predict spikes in demand, and adjust manufacturing schedules and inventory so that stores had sufficient supply when they needed it, she said.
At the same time, she added, the company “adjusted our media copy to reflect the changes our consumers were experiencing … evaluated our ecommerce activation and leveraged our retail sales teams to merchandise that inventory in stores.”
Halloween sales strong despite COVID-19 fears
The company took a same approach with Halloween, resulting in sales for the holiday that were higher than the previous year’s and outpaced the category overall.
“We surveyed our consumers weekly, and we leveraged real time media insights to identify additional early signals around sentiment, enhanced our public and private partnerships to promote safe Halloween guidelines, we created our Hershey Happiness Hub to be a central resource for inspiration and for ideas for celebrating Halloween and we accelerated our omni-channel activation,” Buck said.
The result was strong sales early in the season for at home consumption, baking and crafts, which helped offset lower sales in the final two weeks in anticipation for a more subdued trick-or-treating year, she said.
“Preliminary results indicate that confectionary category sales were down mid-single digits for the seasons ahead of many other Halloween categories,” but “we were able to leverage our brands, insights and capabilities to outpace the category and grow sales slightly versus prior year, significantly expanding our share leaderships,” Buck said.
Holidays focus on baking traditions
Looking forward, Hershey will test the merits of this strategy once again as it moves into the winter Holiday season, which includes not just ready-to-eat sweets but also baking ingredients.
Buck said the business had strong sell-in at retail for its confections, and is merchandised in many stores. The company also is planning for strong baking sales during the holidays, on top of an already strong year for the category.
“Within our baking lineup, we have seen strong growth in our syrup, cocoa and chips products as consumers spend more time cooking at home with their families,” Buck said, pointing to sales increases between 15-20% over the past several months.
She added: “We are excited to build on this momentum in the key November and December months with strong omni-channel activation and in-store execution.”
