Hershey CEO: ‘We believe in advertising’

The Hershey Company, which owns snack brands including Reese’s, Jolly Ranchers and SkinnyPop, is bolstering its pricing and innovation strategy with increased investments in advertising. 

Why it matters 

As Hershey has implemented price increases due to inflation, advertising has been an essential investment to continue brand storytelling and keep consumers engaged. 

By the numbers

• Hershey’s volumes rose 4% in the year to 31 December despite average pricing increases of 8%.
• Advertising and related consumer spending increased 3.3% in Q4.
• Constant net sales increased by 16.4% for the full year.
• Chocolate and salty snacks – Hershey’s two biggest categories – rank as two of the top three treats that consumers are not willing to forgo, even as higher inflation forces cuts elsewhere in their food budget.

A firm belief in advertising 

Advertising plays an essential role in growing Hershey’s iconic brands, especially in an environment where price increases have been necessary. 

“Our long-term model [is that] we believe in advertising. We've seen the impact and the returns that we get on advertising, in terms of having very strong ROI,” said company chairman and CEO Michele Buck on its Q4 2022 earnings call. 

“We take a very data-based approach to media spending, and we invest where we see that incremental profitable growth. Over time, we do know that advertising builds consumer connectivity, and we know that consumer connectivity is part of what helps us to have the [pricing] elasticities that we do,” she added.

The CEO explained that “connectivity leads to them continuing to buy”, which is important during inflationary times, with analysis done to validate that. Analysis of Hershey’s marketing investments also showed that when advertising spend was reduced – as occurred last year due to capacity constraints – there was a negative impact on demand.

“We're also investing in some of our whitespace opportunities, like gummies and ‘better for you’ to strengthen the business, as well as our salty brands where we're really in a major growth mode, gaining household penetration and gaining market share. We want to continue that momentum,” Buck said.