How successful is Hershey (NYSE:HSY)? The company held an analyst presentation on Tuesday that provided some information to help answer that question. One fact in particular stood out to me: The chocolate maker has a 46% share of the $16 billion U.S. retail chocolate market. Clearly, Hershey is king when it comes to the States.
Outside the U.S., though, the story is a bit different. Hershey has much more room to grow abroad, and it knows it. But the company is not launching an all-out blitz in every market. Instead, Hershey is adopting a methodical approach to winning more global market share. Specifically, it is targeting regions where growth in chocolate consumption is strong and where the company already has solid name recognition. The plan seems like a recipe for nice, steady expansion for years to come.
Among the countries being targeted are Canada and Mexico, where Hershey holds 20% and 12% market shares, respectively. This focus on markets close to home makes a lot of sense from an efficiency standpoint, since it allows Hershey to leverage its strong U.S. base to standardize and centralize operations. For example, the company has consolidated back-office activities in the U.S. and is implementing SAP software for all North American operations.
At the same time, Hershey is not using a one-size-fits-all approach with respect to its products. The company seems to understand very well that global requirements and tastes vary considerably, and it is tailoring everything -- from flavor to packaging to price -- to the local scene as necessary. So for developing countries where candy is often sold in an open-air setting, Hershey produces more heat-resistant products. On the taste side, Hershey makes creamier candy for Canadians, who prefer more European-like chocolate, and it hopes to delight Chinese consumers by selling green tea-flavored chocolates.
Hershey isn't going to dominate the world overnight. But the company certainly has plenty of room to grow and a darn good plan to do so. For those looking for long-term growth, Hershey appears to have a lot to offer.
For related stories, check these out:
Fools, now is the time to open your hearts and wallets to worthy causes! Please support our five Foolish charities at www.foolanthropy.com.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
