Cacao Reserve by Hershey isn't likely to make much of an initial dent in Hershey's $5 billion a year in sales. But it doesn't have to. If going upscale is enough to send shivers down the spines of higher-end confectioners, such as Ghirardelli and Campbell Soup's (NYSE:CPB) Godiva, it will be all the more sweet for Hershey to introduce rich bars, truffles, and drinkable cocoa in the coming weeks and months.
This won't be the company's first foray into fine sweets. Hershey's Pot of Gold offers premium boxed treats, and the company also owns a license to sell Cadbury (NYSE:CSG) chocolate products stateside. This new initiative feels a bit more ambitious, though. The company's strong push into premium cocoa also seems to pit it against established players such as Starbucks (NASDAQ:SBUX) at a time when even Coca-Cola (NYSE:KO) is looking to nibble into the warm-beverage market. Hershey can use the boost in breadth. In this past quarter, sales climbed just 5% higher over last year's comparable quarter.
In an ideal world, Hershey would migrate mainstream chocoholics toward pricier treats and introduce them to hot chocolate as a worthy beverage. That would naturally have a material impact on the company's top line. It may seem like a far-fetched fantasy, but isn't that exactly what Starbucks did in replacing the dime-a-cup brews available elsewhere? Watch this story, because something decadently addictive may be stirring.
Coca-Cola is aMotley Fool Inside Valuerecommendation, and Starbucks is aMotley Fool Stock Advisorpick. Try out these or any of our other investing newsletter services free for 30 days.
Longtime Fool contributor Rick Munarriz is still known to dress up on Halloween to accompany his kids on quests for chocolate. He does not own shares in any of the companies mentioned in this story. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Fool has a disclosure policy.
