People are staying outside and making S’mores. That’s great news for Hershey chocolate sales
New York (CNN Business)There’s a correlation between high Covid-19 cases and chocolate sales, according to Hershey. So the candy seller quickly figured out a way to sell more chocolate during the pandemic.
The company noticed that in US zip codes with high coronavirus cases, demand for its milk chocolate bar spiked between 40 and 50 percent, it said Friday. Why? Because in those areas, people were spending more time outdoors to try to curb the spread of the virus. And more time outside meant making more S’mores — and buying more Hershey’s chocolate bars, Hershey (HSY) said.
Hershey saw a spike in demand for milk chocolate in zip codes with high covid cases. With that insight in mind, the company sprang into action. “Our teams quickly created a model that combined actual and projected Covid-19 cases by zip code with store level traffic and sales trends,” said CEO Michele Buck in a pre-recorded message discussing the company’s third quarter sales. “We were able to predict spikes in demand, adjust our manufacturing schedules, and proactively get the right amount of inventory into the right stores.” Read MoreThat’s not all. The company also changed its messaging to “reflect the changes our consumers were experiencing” and focused on online sales. Hershey has been taking marketing during the coronavirus pandemic seriously. Ahead of Halloween, Hershey launched a website that mapped out safe ways to trick-or-treat in every US county. Office workers even volunteered to work in stores and production plants to help out ahead of the holiday.The efforts worked. During the holiday, the company was able to “grow sales slightly versus prior year” and expand its market share, Buck said. She mentioned that people celebrated in creative, pandemic-friendly ways this year, like distributing candy through individual trick or treat bags and setting up slides that let people shoot down candy from their porches. Hershey has been doing well during the pandemic as stressed-out customers reach for candy and baking ingredients, like cocoa, chocolate syrup and chocolate chips. Those products “have consistently grown 15% to 20% over the past several months,” Buck said, noting that the increases at retail have offset declines in foodservice sales. Sales of Pirate’s Booty and SkinnyPop, salty snacks owned by Hershey, have also increased. Hershey’s net sales grew 4% in the three months ending on September 27 compared to the comparable period last year, it said Friday. The company reinstated its fiscal 2020 full-year guidance, which it had previously withdrawn in April, and now expects about 1 percent growth for the year.
But it’s not all candy slides and chocolate chips. Hershey has struggled in some areas, particularly in its refreshment category, which includes mints and gum. The company launched an ad campaign for Ice Breakers mints encouraging people to “mint before you mask” because of so-called “mask breath.” Still, refreshment sales were down 20 to 25% in the quarter. And internationally, the company has seen its sales decline.
Source: edition.cnn.com
