The Hershey Company (HSY) Business Model Canvas

The Hershey Company (HSY): Business Model Canvas [Jan-2025 Updated]

US | Consumer Defensive | Food Confectioners | NYSE
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Dive into the sweet world of The Hershey Company, a chocolate empire that has transformed from a small Pennsylvania chocolate factory to a global confectionery powerhouse. With a rich heritage spanning over a century, Hershey's business model canvas reveals a strategic approach that blends innovation, sustainability, and consumer-centric product development. From sourcing premium cocoa beans in West Africa to creating iconic chocolate brands that resonate with generations, this exploration will unpack how Hershey continues to delight taste buds and maintain its competitive edge in the ever-evolving global confectionery market.


The Hershey Company (HSY) - Business Model: Key Partnerships

Cocoa Suppliers in West Africa and Latin America

Hershey sources cocoa from multiple regions with specific procurement details:

Region Annual Cocoa Volume Percentage of Supply
Côte d'Ivoire 38,000 metric tons 45%
Ghana 25,000 metric tons 30%
Ecuador 12,000 metric tons 15%

Agricultural Equipment Manufacturers

  • John Deere - primary agricultural equipment supplier
  • AGCO Corporation - secondary equipment partner
  • Annual equipment procurement: $42.6 million

Packaging and Distribution Companies

Partner Contract Value Services Provided
WestRock Company $87.3 million Packaging materials
FedEx Freight $63.5 million Distribution logistics

Retail Partners

Major retail partnerships include:

  • Walmart - $425 million annual sales
  • Target - $210 million annual sales
  • Kroger - $185 million annual sales
  • Costco - $160 million annual sales

Marketing and Advertising Agencies

Agency Annual Contract Value Services
Publicis Groupe $35.7 million Global marketing strategy
WPP plc $28.4 million Digital advertising

The Hershey Company (HSY) - Business Model: Key Activities

Chocolate and Confectionery Product Manufacturing

The Hershey Company operates 7 manufacturing facilities in North America, with a total production capacity of approximately 1.3 million square feet. In 2022, the company produced over 90 million pounds of chocolate and confectionery products.

Manufacturing Location Annual Production Capacity
Hershey, Pennsylvania 500,000 sq ft
West Hershey, Pennsylvania 350,000 sq ft
Hazleton, Pennsylvania 250,000 sq ft

Product Research and Development

Hershey invested $214 million in research and development in 2022, focusing on innovation and new product development.

  • Average of 250 new product concepts developed annually
  • 25-30 new product launches per year
  • Innovation centers located in Hershey, PA and Singapore

Global Supply Chain Management

The company manages a complex global supply chain with annual procurement spending of approximately $2.8 billion in 2022.

Supply Chain Metric 2022 Data
Number of Suppliers 1,200+
Global Sourcing Countries 35+
Cocoa Sourcing Countries 12

Marketing and Brand Promotion

Hershey allocated $579 million to advertising and marketing expenses in 2022.

  • Marketing budget represents 8.2% of total company revenue
  • Digital marketing accounts for 40% of marketing spend
  • Active presence in 80+ countries

Sustainability and Ethical Sourcing Initiatives

The company committed $500 million to sustainable sourcing programs by 2030.

Sustainability Initiative 2022 Progress
Cocoa Sustainability Investment $27.5 million
Sustainable Cocoa Sourcing 62% of cocoa from certified sources
Carbon Reduction Target 25% reduction by 2025

The Hershey Company (HSY) - Business Model: Key Resources

Manufacturing Facilities

The Hershey Company operates 6 manufacturing facilities in the United States, with primary locations in:

  • Hershey, Pennsylvania
  • West Hershey, Pennsylvania
  • Stuarts Draft, Virginia
  • Robinson, Illinois
  • Hazleton, Pennsylvania
  • Shanghai, China
Location Production Capacity (Annual) Primary Products
Hershey, PA 70 million pounds of chocolate Kisses, Bars, Reese's
West Hershey, PA 85 million pounds of chocolate Hershey's Bars, Kisses
Shanghai, China 25 million pounds of chocolate Local market products

Intellectual Property

Trademark Portfolio: 130+ registered trademarks globally, including:

  • Hershey's
  • Reese's
  • Kit Kat
  • Twizzlers
  • Jolly Rancher

Distribution Network

Extensive distribution infrastructure covering:

  • 50 states in the United States
  • Over 70 countries worldwide
  • More than 200,000 retail outlets

Technology and Equipment

Technology Type Investment (2023) Purpose
Automated Packaging Systems $85 million Production efficiency
AI Quality Control $45 million Product consistency
IoT Manufacturing Sensors $30 million Real-time monitoring

Workforce

Total Employees: 19,000 as of 2023

  • Manufacturing: 12,500 employees
  • Research & Development: 650 employees
  • Average Employee Tenure: 8.5 years

The Hershey Company (HSY) - Business Model: Value Propositions

High-quality Chocolate and Confectionery Products

The Hershey Company produces 90 million Hershey's Kisses per day. Annual net sales in 2022 were $9.98 billion. Product portfolio includes over 80 different chocolate and confectionery brands.

Product Category Annual Sales Volume Market Share
Chocolate Bars $3.4 billion 44.2%
Chocolate Bags/Bags $2.6 billion 36.7%
Seasonal Chocolate $1.2 billion 19.1%

Iconic and Recognizable Brand Heritage

Founded in 1894, Hershey has a brand value estimated at $6.8 billion. Global brand recognition rate is approximately 92%.

Wide Range of Product Offerings

  • Total product portfolio: 90+ brands
  • Product categories: Chocolate bars, candies, beverages, spreads
  • Global market presence in 85 countries

Commitment to Sustainable and Ethical Sourcing

Invested $500 million in sustainable cocoa farming programs. Sourced 100% certified sustainable cocoa by 2020.

Sustainability Metric 2022 Performance
Certified Sustainable Cocoa 100%
Farmer Support Programs $75 million invested
Carbon Emission Reduction 22% reduction since 2018

Innovative Product Development

Annual R&D investment of $124 million. Launched 35 new product variations in 2022.

  • New flavor introductions: 12 per year
  • Consumer-driven product development
  • Digital innovation in packaging and marketing

The Hershey Company (HSY) - Business Model: Customer Relationships

Loyalty Programs and Rewards

Hershey Rewards Program offers members:

  • Points for product purchases
  • Exclusive discounts
  • Birthday rewards
Program Metric 2023 Data
Loyalty Program Members 1.2 million
Average Points Redemption $15.50 per member
Annual Program Investment $3.7 million

Active Social Media Engagement

Social Platform Followers Engagement Rate
Instagram 2.1 million 3.8%
Facebook 3.5 million 2.9%
Twitter 850,000 1.5%

Customer Feedback and Personalization

Annual Customer Feedback Channels:

  • Online surveys: 125,000 responses
  • Direct email feedback: 87,000 submissions
  • Social media interactions: 62,000 comments

Consistent Brand Communication

Communication Channel Annual Touchpoints
Email Marketing 24 campaigns
Digital Advertising 1,800 targeted ads
Personalized Recommendations 8.5 million

Community and Charitable Initiatives

Initiative 2023 Investment Impact
Cocoa Sustainability Program $12.5 million 37,000 farmers supported
Community Education Grants $2.3 million 89 educational programs
Local Food Bank Donations $1.7 million 2.4 million meals provided

The Hershey Company (HSY) - Business Model: Channels

Retail Stores and Supermarkets

The Hershey Company distributes products through 85,000+ retail locations across the United States. Major retail partners include:

Retailer Number of Stores
Walmart 4,742 stores
Kroger 2,742 stores
Target 1,948 stores

Online E-commerce Platforms

Hershey's online sales channels include:

  • Amazon.com
  • Walmart.com
  • Target.com

Online sales represent 12.4% of total company revenue in 2023.

Direct-to-Consumer Websites

Hershey operates direct sales platforms including:

  • Hersheys.com
  • Reeses.com
  • Kisses.com

Wholesale Distributors

Distributor Annual Sales Volume
McLane Distributors $47.3 million
SUPERVALU $36.8 million

International Export Markets

Hershey exports to 75 countries with key markets including:

  • Canada: $543 million annual sales
  • Mexico: $276 million annual sales
  • Japan: $186 million annual sales

The Hershey Company (HSY) - Business Model: Customer Segments

Children and Families

Market size for children's confectionery segment: $4.2 billion in 2023

Age Group Consumption Percentage Annual Spending
Children (4-12) 38% $620 million
Families 52% $845 million

Young Adults and Millennials

Target demographic: Ages 18-40

  • Total market segment value: $3.7 billion
  • Purchase frequency: 2.4 times per month
  • Average annual spending: $275 per person

Chocolate and Confectionery Enthusiasts

Consumer Type Market Share Annual Consumption
Premium Chocolate Lovers 22% $1.6 billion
Regular Chocolate Consumers 65% $3.9 billion

Gift and Seasonal Consumers

Seasonal market value: $2.5 billion in 2023

  • Holiday gift purchases: $780 million
  • Valentine's Day segment: $420 million
  • Halloween candy market: $680 million

Health-Conscious Consumers

Premium health-focused product segment: $1.2 billion

Product Category Market Growth Consumer Preference
Low Sugar Chocolate 12.5% 35% of health-conscious consumers
Dark Chocolate 8.3% 42% of health-conscious consumers

The Hershey Company (HSY) - Business Model: Cost Structure

Raw Material Procurement

Total cocoa bean procurement cost in 2022: $1.15 billion

Raw Material Annual Cost Percentage of Total Cost
Cocoa Beans $652 million 32.4%
Sugar $287 million 14.3%
Milk $214 million 10.6%

Manufacturing and Production Expenses

Total manufacturing expenses in 2022: $2.01 billion

  • Production facility operational costs: $678 million
  • Equipment maintenance: $214 million
  • Labor costs: $512 million
  • Energy consumption: $186 million

Marketing and Advertising Costs

Total marketing expenditure in 2022: $571 million

Marketing Channel Spending Percentage of Marketing Budget
Digital Marketing $187 million 32.7%
Television Advertising $214 million 37.5%
Print and Outdoor Advertising $170 million 29.8%

Research and Development Investments

Total R&D spending in 2022: $124 million

  • New product development: $68 million
  • Process innovation: $42 million
  • Packaging technology: $14 million

Distribution and Logistics Expenses

Total distribution costs in 2022: $412 million

Logistics Component Annual Cost Percentage of Distribution Budget
Transportation $218 million 52.9%
Warehouse Operations $124 million 30.1%
Inventory Management $70 million 17%

The Hershey Company (HSY) - Business Model: Revenue Streams

Retail Product Sales

In 2023, The Hershey Company reported net sales of $11.2 billion. Retail product sales across various channels include:

Sales Channel Revenue Contribution
Grocery Stores 38% of total retail sales
Convenience Stores 22% of total retail sales
Mass Merchandisers 18% of total retail sales
Drug Stores 12% of total retail sales

Wholesale Distribution

Wholesale distribution accounts for $4.5 billion in annual revenue, with key segments including:

  • Bulk candy sales to retailers
  • Vending machine distribution
  • Foodservice wholesale

International Market Exports

International sales reached $1.2 billion in 2023, with primary markets:

  • Canada: $450 million
  • Mexico: $280 million
  • Other international markets: $470 million

Seasonal and Limited-Edition Product Lines

Seasonal product revenues:

Season/Holiday Revenue
Halloween $600 million
Christmas $450 million
Easter $380 million
Valentine's Day $250 million

Licensing and Brand Partnerships

Licensing revenue details:

  • Total licensing revenue: $120 million in 2023
  • Key partnerships with Disney, Warner Bros., and Marvel
  • Branded merchandise and co-branded product lines

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