Final Post

I chose Hershey as my company to follow this semester because:
1. I love chocolate
2. Milton Hershey's story is quite inspiring
3. I still love chocolate!

I'm really glad this is the company I chose.  There have been many things I have learned about them through this process.  With a classmate focusing on the rival Mars company, it made it even more interesting! 

The most interesting thing I learned about Hershey was the scandal involving the purchase of the golf course.  The inflated purchase seems to go directly against Mr. Hershey's wishes. 

Would I work for Hershey?  I probably would.  They are a solid company that seems to take good care of their employees.

Hershey's suing over wrappers

http://www.boston.com/business/articles/2010/11/27/hershey_suing_mars_over_candy_wrappers/

Final Stock Price Update

11/15:  $47.00
11/16:  $46.40
11/17:  $46.24
11/18:  $46.55
11/19:  $46.52

11/22:  $46.62
11/23:  $46.70
11/24:  $47.13
11/26:  $47.22

11/29:  $46.69
11/30:  $46.80
12/1:    $47.23


$1,000 invested 9/1/10 @ $47.79=20.92488 shares

20.92488 shares @ 12/1/10 = $988.28

So $1,000 invested on September 1st would be worth $988.28 on December 1st.

Although I would have lost $11.72 on my investment in the last 3 months, I would still invest in Hershey.  They have some areas to work on and competition in the industry is becoming tighter..... but they are still the leader and will likely always have a significant presence in the market.  They are still the first thing that comes to most American's minds when you say the words "milk chocolate"!

Hershey Culture

Milton Hershey took culture to a whole new level with The Hershey Company.  He not only instilled a "fair treatment" culture within the company, he also developed a whole town around it.  Read more about Hershey's culture at the link below.

It seems that Hershey is having a difficult time maintaining a competitive advantage while still keeping with the culture that Mr. Hershey envisioned for the company.  In order to remain competitive, they have to look to outsourcing and foreign production to reduce costs.  However, Mr. Hershey's vision was to keep business in the community and provide as well as possible the company's employees. 
 
http://www.washingtoniv.com/?p=71

Scandals

I have already posted regarding Hershey & Fair Trade http://jenniferhersheyformgt656.blogspot.com/2010/10/hershey-falling-short-on-fair-trade.html

& the scandal regarding the CEO & others profiting on the purchase of the golf course with MHS trust money
http://jenniferhersheyformgt656.blogspot.com/2010/10/probe-of-hershey-trust-purchase-of-golf.html

Others scandals I found:

Sex abuse case at Hershey School
http://www.philly.com/inquirer/front_page/20100520_Sex-abuse_case_shatters_Hershey_School.html

Salmonella scare sparks Hershey recall
http://articles.moneycentral.msn.com/Investing/Extra/SalmonellaScarePromptsHersheyRecall.aspx

Feel the Frost

The Hershey Company invites consumers to embark on a new powerfully cool taste experience with the launch of Ice BreakersFrost^(TM) sugar-free mints. The only mint coated with an intense combination of xylitol, cooling and flavor crystals, new Ice Breakers Frost mints deliver a surprisingly powerful and enjoyable experience. Ice Breakers Frost mints are now available at retail in two intensely cool flavors - Wintercool^(TM) and peppermint.

http://www.thehersheycompany.com/newsroom/news-release-1493967.aspx

Stock Update

11/8:     $48.46
11/9:     $48.16
11/10:   $47.92
11/11:   $47.98
11/12:   $47.55

Hershey's website

Hershey has changed the look of their website.  The content is laid out almost exactly as it was before.  The graphics are much different, though.  They used alot of pictures of people....giving the perception that Hershey's candy is for people like you!

http://www.thehersheycompany.com/

J.P. Bilbrey named COO

On November 2nd, The Hershey Company elected J.P. Bilbrey to the newly created Chief Operating Officer position.  The position will focus on the day-to-day operations and the supply chain.  It is suppose to allow the CEO to focus more on the strategic and business development initiatives. "Bilbrey will also lead two new business units, responsible for building and leveraging Hershey's global brands, creating confectionery marketplace innovation and disseminating best demonstrated practices."  One article mentions that he will be working to strengthen US market position & increase global competitiveness.

http://www.thehersheycompany.com/news/release.asp?releaseID=1490640
http://www.pennlive.com/midstate/index.ssf/2010/11/hershey_co_creates_chief_opera.html

Stock Update

10/25-  $49.60
10/26-  $49.41
10/27-  $48.91
10/28-  $49.36
10/29-  $49.49

11/1-  $49.13
11/2-  $48.92
11/3-  $49.19
11/4-  $48.86
11/5-  $48.49

M&A

The Hershey Company's most recent acquisitions have been:

Feb 2009- Van Houten Singapore Pte Ltd (chocolate brand sold in Asia)

Oct 2006- Dagoba Organic Chocolate LLC (producer of chocolate products)

Aug 2005- Joseph Schmidt Confections Inc (producer of premium handcrafted chocolate products) and Scharffen Bergen Chocolate (producer of premium dark chocolate products)

Dec 2004- Mauna Loa Macadamia Nut Corp (producer of macadamia nuts)

Sugar Prices Expected to Rise

Taken from 10/19/10 article on MSN.

"...droughts in South America have pushed down sugar cane forecasts and should ultimately result in high sugar prices. Brazilian company Cosan Ltd. last month revised its 2011/12 sugar cane crush forecast downwards. Also, the Environmental Protection Agency's recent approval for an increase of the percentage of ethanol allowed in gasoline from 10% to 15%, could increase demand for sugar and further affect prices."


http://articles.moneycentral.msn.com/news/article.aspx?Feed=MW&Date=20101019&ID=12191289&Symbol=US:HSY

Stock Update

10/18: $51.33
10/19: $50.98
10/20: $51.10
10/21: $49.32
10/22: $49.91

Stock Update

10/11: $49.26
10/12: $49.91
10/13: $50.76
10/14: $50.86
10/15: $51.62

Hershey Recipe Change....Yes, It's True...Well, Somewhat...

My classmate posted a blog recently on Hershey's recipe change and how it is leading to the decreased market share.  http://luciangmarsinc.blogspot.com/2010/10/fake-chocolate-say-it-isnt-so-hersheys.html  I feel like it is an area I should address in my Hershey blog...and also add a bit of clarification for those who are ready to switch chocolate bars. 

Yes, Hershey has changed their recipe on some of their products.  They have replaced the cocoa butter with vegetable oil in these products.  If you look at the labels, they are pretty easy to spot.  The FDA does not allow a product to be called "chocolate" if it contains any vegetable oil.  So the changed products will say something like "chocolatey coating" or "chocolate-flavored".  However, 85% of their products remain unchanged.  The classic Hershey bar, for instance, is the same recipe that we have grown up on.  Some of the products that have been changed are their smaller sellers, such as Mr.Goodbar, Take5, and Kissables. 

While I'm not sure I agree with the recipe change, I do see where the temptation came in to cut costs.  Because of the high competition in the candy industry, they couldn't raise their prices to pass their increased costs along to consumers.  Some customers have stated they feel betrayed...like Hershey tried to slip the recipe change in under the radar.  Well, they did.  At the same time, I don't remember hearing any ads about how Mars candy bars were going to be shrinking to cut costs.  So who's to say which, if either, was more deceitful?

Some people have stated that the new recipe provides less health benefits because of the removal of cocoa butter.  Well, seriously, most people are not eating chocolate for the health benefits.  The milk chocolate that most people enjoy actually provides little health benefit when you take into account the high amounts of sugar and fat that make it so yummy.  If you are seeking the health benefits, try a spoonful of pure unsweetened cocoa instead.     

Today show video:  http://today.msnbc.msn.com/id/26184891/vp/26788318#26788318

Article:  http://www.pennlive.com/midstate/index.ssf/2008/09/a_consumer_segment_on_nbcs.html

Hershey falling short on Fair Trade

October is Fair Trade Month.  Even though Hershey leads the US market share at just over 40%, they are doing the least in the area of fair trade.  Competitors Mars, Kraft, Nestle, and Cargill are embracing fair trade.  Global Exchange, Green America, and the International Labor Rights Forum, and Oasis USA got together to release the report, TIME TO RAISE THE BAR: The Real Corporate Social Responsibility Report for the Hershey Company.   (Hershey released its first ever Corporate Social Resonsobility Report last week.) 

http://www.fastcompany.com/1693089/hershey-gets-a-not-so-sweet-declaration-for-fair-trade-month

Original Hershey Chocolate Factory Set To Close

Hershey has announced that they will be closing their original factory.  They state that it is old and cannot accomodate new equipment necessary to remain cometitive globally.  A new facility is being built just outside of town for $300M.  600 workers are scheduled to be moved to the old to new plant, but 500 employees are scheduled to be replaced by machinery.

 http://www.npr.org/templates/story/story.php?storyId=130079220&ft=1&f=1003

Probe of Hershey Trust Purchase of Golf Course Stalled?

This is an interesting article that came out today.  A watchdog group is accusing Attorney General and Republican nominee for governor Tom Corbett of stalling (to prectect political allies) in launching an investigation into the purchase of a golf course by the trust that oversees the Milton Hershey School.  Representatives of the nonprofit Protect the Hersheys' Children Inc. said Corbett's office ignored concerns it had expressed over the acquisition of the golf course as far back as 2006 (the year the course changed hands).  The investigation did not begin til this September.  Earlier this month, The Philladelphia Inquirer reported that the trust paid an inflated price of $12M for the golf course, which is said to be operating at a loss.  They also claim that the sale enabled several dozen local investors to profit.....one of them being Hershey's then CEO Richard Lenny.  Corbett's office oversees Pennsylvania charities and confirmed last week that it had launched a non-criminal investigation of The Hershey Trust Co.

Read the full article here:

 http://finance.yahoo.com/news/Hershey-school-watchdog-hits-apf-1936455721.html?x=0&.v=1

Hershey Teaming Up With Registered Dieticians!

This is just a very brief bit of the article.  It is a unique idea, but I wonder how many people will take advantage of it and how much it will cost Hershey to administer.  When I visited the program’s website, it says that the voucher for a free visit with a registered dietician has ended.  However, there is a link to help you find a RD if you are interested in meeting with one on your own. 

9/15/10

Hershey Center for Health & Nutrition and American Dietetic Association Unveil National Initiative to Cover the Cost of Registered Dietitian Visits for Consumers

Initiative Kicks Off MODERATION NATION, Program that Features Host of New Tools and Resources to Educate People on How to Achieve Balance through Moderation The Hershey Center for Health and Nutrition (HCHN) has joined with the American Dietetic Association (ADA) to unveil Moderation Nation, a new program which kicks off by providing complimentary visits with ADA member registered dieticians to consumers, age 18 or over.  Moderation Nation seeks to educate people on how to achieve balance in their lives through moderation, both in nutrition and physical activity. The program features online and face-to-face engagement tools, such as Moderation Menus and a new iPhone mobile application, to help people understand what moderation means for them and their families and how to apply it to their everyday lives. While the concept of moderation has been espoused for decades, this campaign represents one of the first concerted efforts to turn the theory of moderation into practice on such a widespread scale. Read the whole article here: http://www.thehersheycompany.com/news/release.asp?releaseID=1471272

Press Release: Breast Cancer Awareness 220-Mile Charity Bike Ride

10/1/10
Hershey's Bliss Chocolates Kicks off Breast Cancer Awareness Month with 220-Mile Charity Bike Ride

Hershey's Bliss Chocolates is kicking off Breast Cancer Awareness Month as the presenting sponsor of the seventh annual YSC Tour de Pink - a four-day, 220-mile bike ride benefiting Young Survival Coalition (YSC). On October 1, more than 200 breast cancer survivors and supporters began pedaling from Hershey, Pa., to New York City, raising funds and awareness for YSC - the premier international organization dedicated to the critical issues unique to young women and breast cancer. This year, the ride will expand to also include a three-day ride from Newbury Park, Calif., to Malibu, Calif on October 29 - 31. Hershey's Bliss Chocolates also is honoring young survivors by featuring four women and their survivor stories on http://www.hersheysbliss.com/.


In honor of Breast Cancer Awareness Month, Hershey's Bliss Chocolates will donate $300,000 to YSC, raising awareness for breast cancer and funding critical programming and education.

"Hershey'sBliss Chocolates is proud to continue The Hershey Company's support of Young Survival Coalition as a presenting sponsor of this year's charity bike rides," said Michele Buck, Senior Vice President, Global Chief Marketing Officer, The Hershey Company. "Breast cancer is a disease that touches the lives of many Americans. Hershey's has donated more than $1.75 million to YSC over the past six years and we invite everyone to join us in support of the cause."

Sixth Annual YSC Tour de Pink presented by Hershey's Bliss
For the sixth consecutive year, The Hershey Company invited consumers to show their support for Young Survival Coalition by taking part in the YSC Tour de Pink presented by Hershey's Bliss four-day ride. The 220-mile bike ride kicked off Friday, October 1, in Hershey, Pa., with finish line ceremonies taking place in New York City on Monday, October 4. This year, an additional three-day, 200-mile bike ride has been added that will span from Newbury, Calif. to Santa Barbara, Calif. from October 29 - 31, 2010.
Consumers across the country also had the chance to get involved by joining the YSC Tour de Pink presented by Hershey's Bliss Virtual Charity Ride. The Virtual Ride challenged consumers to pedal 220 miles in their own community, logging efforts and raising funds for YSC online.

Young Survival Coalition (YSC) is the premier international organization dedicated to the critical issues unique to young women and breast cancer. YSC works with survivors, caregivers, and the medical, research, advocacy and legislative communities to increase the quality and quantity of life for women diagnosed with breast cancer ages 40 and under.

"The Hershey Company's support of Young Survival Coalition helps provide funds for the critical programs and services we offer to young women battling breast cancer and their families," said Lisa J. Frank, Co-Founder of Tour de Pink and Board Member of Young Survival Coalition. "With funds raised through participation in YSC Tour de Pink presented by Hershey's Bliss bike rides, we're able to offer outreach programs that bring awareness about YSC to many communities."
For more information on the YSC Tour de Pink presented by Hershey's Bliss, visit http://www.hersheysbliss.com/.

About Young Survival Coalition
Young Survival Coalition was founded in 1998 by three women diagnosed with breast cancer under the age of 35 who were discouraged by the lack of information available to young women diagnosed with the disease. YSC reaches over 200,000 women every year both virtually through youngsurvival.org or Facebook and locally in their communities, with nearly 30 affiliates, across the United States. Dedicated to the critical issues unique to young women diagnosed with breast cancer, YSC offers resources, connections and outreach so women feel supported, empowered and hopeful.

YSC works to change the face of breast cancer by advocating for more research involving young women diagnosed with breast cancer and building awareness that young women CAN and DO get breast cancer.

 http://www.thehersheycompany.com/news/release.asp?releaseID=1478202

Personal Comments:
I love when companies sponsor events like these where they not only encourage the community to get involved in raising money but also to get out and be more active.  It would be better, however, if they got events like this out there more so that people know about them.  This press release is the first I heard about this event.

Quarterly Dividends Declared

The Board of Directors of The Hershey Company (NYSE: HSY) today declared quarterly dividends of $0.32 on the Common Stock and $0.29 on the Class B Common Stock. The dividends are payable December 15, 2010, to stockholders of record November 24, 2010. It is the 324^th consecutive regular dividend on the Common Stock and the 105^th consecutive regular dividend on the Class B Common Stock.



http://www.thehersheycompany.com/news/release.asp?releaseID=1479100

Vertical Integration & Outsourcing

I can't find that Hershey uses much vertical integration.  From 1918 to 1946, they had sugar operations in Cuba.  They did add some backward integration with the purchase  of the Mauna Loa Macadamia Nut Corporation in December 2004.  Their forward integration seems to end at the Hershey store located in Hershey, PA. 

In February 2007, Hershey announced plans to cut 1,500 jobs by moving some of their operations to Mexico and outsourcing the production of their block chocolate bars to Barry Callebaut (notes as the world's leading manufacturer of high-quality cocoa and chocolate products).  The block chocolate is the main ingredient in many of Hershey's products.  Side note:  In February 2009, Barry Callebaut sold 100% of its consumer company in Asia, Van Houten Singapore, to Hershey.  They retained ownership of the Van Houten Brand but granted Hershey a perpetual, exclusive license of the brand name and related trademarks in Asia Pacific, the Middle East, and Australia/New Zealand for consumer products.

Other than the creation of manufacturing facilities in Mexico, I find no other information indicating Hershey is outsourcing.  With outsourcing becoming such a commonly used competitive strategy, I think their lack of outsourcing could be a contributing factor to their weaknesses in the global market.
  


http://www.scdigest.com/assets/newsViews/07-05-02-1.php?cid=1041&ctype=content
http://foodbizdaily.com/articles/27841-hershey-to-buy-van-houten-singapore-consumer-business.aspx

Generic Strategy Fit

From the Five Generic Competitive Strategies outlined in our text, I think Hershey follows a focused low-cost provider strategy. 

Strategic Target:  They compete in a narrow market niche. (mostly candy and some other food products)

Basis of Competitive Advantage: There is constant competition to have a low cost product.  In this market niche, competitors will quickly meet/beat low prices.  So on this aspect, they don't quite fit.

Product line:  The features and attributes of their products are tailored to the tastes and requirements of the niche members. (e.g. dark chocolate when buyers became more health conscious)

Production emphasis: They are continuously searching for ways to reduce costs while putting out new innovative products matched to niche member preferences.  My post from 8/31/10 talks a bit about how they are evolving their processes to reduce costs.

Marketing emphasis:  Marketing efforts point out the features that satisfy targeted consumers wants/needs while remaining budget friendly. (e.g. in store displays of buy 2 for $1)  Because of the competitive pricing in the niche, more emphasis is placed on the product features in marketing than on the price.

Keys to sustaining strategy:  Hershey demonstrates that they are committed to serving the niche at the lowest costs they can.  They also do not demonstrate any attempt to enter into other market segments and seem to be concentrating on increasing their competitive position in the candy/food product industry.

Stock Update

9/27: $47.41
9/28: $47.64
9/29: $47.79
9/30: $47.59
10/1: $47.79

10/4: $47.63
10/5: $48.10
10/6: $48.17
10/7: $47.88
10/8: $48.75

Stock Price Update

9/20: $48.13
9/21: $47.96
9/22: $47.81
9/23: $47.56
9/24: $48.12

Strengths & Weaknesses

Strengths: 
Strong brand image
Diversified products
Strong customer relationships

Weaknesses: 
Strong dependence on US market
High level of borrowing

Facebook/Twitter

Hershey's Facebook page can be found at http://www.facebook.com/HERSHEYS
As of today, there are 1,072,147 who like this page.

Their Twitter page can be found at http://twitter.com/hersheys

Press Release: Hershey issues first Corporate Responsibility Report

On 9/15/10, The Hershey Company issued its first Corporate Social Responsibility (CSR) Report. The report was launched on the anniversary of Milton S. Hershey's birthday, in commemoration of the company's legacy of responsible operation and of its commitment to continued progress. The CSR Report, outlines the company's priorities and sets goals for improvement in key areas.

"Our belief in the importance of CSR dates to the founding of our company more than 100 years ago," said David J. West, President and Chief Executive Officer, The Hershey Company. "Today, CSR is an integral part of our global business strategy. Our CSR efforts stretch from our headquarters and manufacturing facilities in Hershey, Pennsylvania, to our operations in countries such as Mexico and India, to the cocoa farming villages of West Africa. While we are proud of our accomplishments, including the contributions we make to children in need, we understand that much remains to be done."

Hershey's CSR Report outlines the company's priorities and programs in four areas:

• Marketplace, which includes the company's commitment to fair and ethical business dealings;
• Environment, which includes Hershey's environmental stewardship;
• Workplace, which describes efforts to create a desirable workplace for Hershey's employees who contribute to Hershey's success; and
• Community, which outlines Hershey's focus on making a positive difference in communities around the world.

Hershey's CSR Report outlines the company's accomplishments in these areas and sets measurable goals for future progress. For example, the company has decreased energy consumption by nearly 10 percent in its manufacturing and distribution facilities since 2008. Hershey, along with others in the industry working through the World Cocoa Foundation, has taken a proactive leadership role in promoting sustainable cocoa farming practices and increasing incomes for cocoa farming families. These programs have made a positive difference in the lives of 500,000 farming families over the past decade.
In developing its CSR report, Hershey applied the Global Reporting Initiative (GRI) G3 Sustainability Reporting Guidelines, a widely used standard that provides a framework for reporting and, most importantly, tracking progress.  To read Hershey's Corporate Social Responsibility Report, go to http://www.thehersheycompany.com/social-responsibility

http://www.thehersheycompany.com/news/release.asp?releaseID=1470232

Financial Situation

Taken from Hershey’s 2009 form 10-K

FINANCIAL CONDITION

Our financial condition remained strong during 2009. Solid cash flow from operations and our liquidity, leverage and capital structure contributed to our continued investment grade credit rating by recognized rating agencies.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS-EXECUTIVE OVERVIEW

Our results for the year ended December 31, 2009 demonstrated excellent progress in a difficult economic environment. We exceeded net sales targets, while implementing price increases and operational efficiency improvements necessary to offset significant increases in input and employee benefits costs. We have essentially completed the global supply chain transformation program and have achieved our objectives. We increased advertising investment in our core brands in North America and in certain of our key international markets, while also achieving strong growth in adjusted earnings per share-diluted. We generated strong cash flow from operations and our financial position remains solid.

Net sales increased 3.2%, which was within our long-term growth target. The increase was driven by price realization, as sales volumes declined at less than expected rates due to pricing elasticity. Earnings per share growth exceeded our long-term objective and our North American market share increased during the year.

Our financial results and marketplace performance for the year indicate that our consumer-driven approach to core brand investment along with necessary pricing actions enable us to continue to meet our long-term financial goals. Our efforts will remain focused toward implementing our major strategic initiatives to deliver sustainable long-term growth in the evolving marketplace.

The Numbers:

                                            Common Stock

                                               Price Range

2009                       High           Low

Q1                          $38.23        $30.27

Q2                          $37.83        $33.70

Q3                          $42.25        $35.78

Q4                          $41.62        $35.05

Test	2009	2008	2007
Gross Profit Margin	38.70%	34.20%	33.00%
Return(loss) on Assets	21.20%	(24.10%)	7.10%
Earnings per Share	$1.90	$1.36	$0.93
Current Ratio	1.52	1.06	no data
Debt-to-Asset Ratio	0.79	0.90	no data

These financial tests all indicate the the company’s financial trends are moving in the right direction.  It does not appear that the company has excessive debt.

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzczOTEyfENoaWxkSUQ9MzcxODQyfFR5cGU9MQ==&t=1

Hershey Company Profile

Mission Statement:
Bringing sweet moments of Hershey happiness to the world every day.
To our stakeholders, this means:
Consumers – Delivering quality consumer-driven confectionery experiences for all occasions
Employees – Winning with an aligned and empowered organization … while having fun
Business Partners – Building collaborative relationships for profitable growth with our customers, suppliers and partners
Shareholders – Creating sustainable value
Communities – Honoring our heritage through continued commitment to making a positive difference

Values:
 Hershey's Values, "One Hershey," tell a powerful story: A global and diverse team, operating with integrity, working together, determined to make a difference.

Open to Possibilities

We are Open to Possibilities by embracing diversity, seeking new approaches and striving for continuous improvement.

Growing Together

We are Growing Together by sharing knowledge and unwrapping human potential in an environment of mutual respect.

Making a Difference

We are Making a Difference by leading with integrity and determination to have a positive impact on everything we do.

One Hershey

We are One Hershey, winning together while accepting individual responsibility for our results.

http://www.thehersheycompany.com/about/profile.asp

Stock Prices

Update on Stock Prices:

9/7:  $46.43
9/8:  $46.43
9/9:  $46.33
9/10: $45.94

9/13: $45.75
9/14: $45.49
9/15: $45.69
9/16: $47.26
9/17: $47.37

Virtual Chocolate Milk? And you're fighting over it?

I heard about this on the news this morning.  Here is the short version:

Hershey filed a preemptive complaint earlier this summer for a court to determine if they infringed on a copyright held by Las Vegas-based software developer Hottrix LLC.  On Monday, Hottrix filed a counter complaint alleging that Hershey cost them over $12 million in lost profits and damage to their brand. 

Both companies developed a similar iPhone app which allows the user to make virtual chocolate milk.  Hottrix's app came first and includes plain milk and strawberry milk.  Users have to tip the phone to "drink" from it.  Hershey's claims its app, which was released in October, is much different.  It includes the use of a red & white straw to drink milk from the screen.

I have to admit...I don't own a smart phone so maybe I just don't get it.  But seriously!  Who sits around making virtual chocolate drinks and pretending to drink them?

On a serious note, it does seem to be a very similar app that Hershey released.  I will be interested to see how the court weighs in on this one.

http://www.msnbc.msn.com/id/39156799?gt1=43001&utm_source=twitterfeed&utm_medium=twitter

Not your "typical" boarding school!

The Milton Hershey School (MHS) is a truly unique learning environment.  They state that they are "devoted to helping students in Pre-K through 12th grade develop academically, behaviorally, physically, socially, and spiritually, with an emphasis on preparing students to lead fulfilling and productive lives after graduation from MHS."  The school is structured in three levels: Elementary Division, Middle Division, and Senior Division.  Programming is designed around the developmental needs of students in each division and provides a nurturing environment for students as they transition through each grade level.  Additionally, three centralized program areas integrate the work of the divisions and ensure consistency of support throughout students' MHS experience:  Applied & Integrated Learning (curriculum development, visual & performing arts, etc), Student Health Services (medical, dental, psychological, behavioral, and social work services), and Student Character & Leadership (community service, recreational activities, religious programs, etc.).  Working in conjunction with the academic curriculum, these three areas help ensure that students have a combination of learning and life experiences, along with a focus on developing social, emotional, spiritual, and physical health throughout their years at MHS.

One of the things I find most unique about this school is the living environment.  Students are not stuck in your typical "dorm"-like living quarters.  Children live in family-like homes.  Each home consists of 10-14 students from the same division (e.g. Elementary).  These homes are each overseen by a married couple who are the houseparents for the home.  They take an active interest in each MHS students' development and well-being.  They support students in the daily lives and serve as the primary contact for the children in their care, but they also work in partnership with the natural parent/guardian.  Just like any parent, they teach the children responsible life values and provide structure and guidance.  Students are required to do their chores and study just like any child living at home.  Students live and learn with each other and become each other's second family.  The houses are well-equipped with normal living quarters plus a recreation room and computer lab.  The houseparents have their own private area that is separated from the students but still in the same home.  Because of limited space, houseparents cannot have more than 2 dependent children of their own living with them.  There is also a transitional living program from senior year students where they learn to live on their own in apartment style settings (with supervising adults living on-site in their own apartments).  Students are taught to cook, shop, and budget on their own.  Each of them is provided a debit card with a set dollar amount for each week with which they must buy groceries and household necessities.

The school offers more than just your typical school functions.  They have:

12 varsity athletic teams

6 choral groups and 20 different musical instrument choices

Animal clubs and 4H

Theater productions

Boy Scouts, Girl Scouts, and service organizations

Internships and part-time jobs at local businesses (for high school students)

Ice skating, swimming, biking, ice hockey, dance, and more

The school's policy is for each student to be "plainly, neatly, and comfortably clothed, without distinctive dress." Students are issued uniforms for school and are free to wear their own clothes during leisure time.  If a parent or sponsor cannot afford to provide leisure wear for a student, it is the policy of the School to provide all such clothing at no expense to either the student or his/her family.

Of course, a setting like this requires some pretty strict safety measures.  The secure neighborhood community is closely monitored by the Safety & Security Department that patrols the campus and student homes 24 hours daily, seven days a week. In addition, all MHS students and staff wear photo identification badges, and all student homes are equipped with electronic security systems.

What does it take to get in?  To be considered for enrollment, the child must:

• Come from a family of low income, limited resources, and social need.
• Be from the ages of 4-15 years old.
• Have the ability to learn.
• Be free of serious emotional and behavioral problems that disrupt life in the classroom or the home.
• Be able to take part in the School's program. Be born in the United States.

Some statistics on current enrollment (Sep 2009):

Total number of students: 1,818
Male students: 873
Female students: 945

Number of students by Division
Elementary Division: 307
Middle Division: 644
Senior Division: 867

Ethnic composition of student body
Caucasian: 44 percent
African-American: 27 percent
Hispanic: 15 percent
Asian: 1 percent
Other: 13 percent

Geographic residence of student body (sponsor's residence)
Tri-county area (Lebanon, Dauphin and Lancaster counties in Pennsylvania): 31 percent
Other counties in Pennsylvania: 49 percent
Other states (34 other states including DC): 20 percent

While this post might be pretty long, it is only a brief overview of the Milton Hershey School.  Check out the school's website for more info.    http://www.mhs-pa.org/

Mr. Hershey died a poor man!

Milton Hershey was a philanthropist before it became a competitive strategy in business.  At his death, his will was only three paragraphs long. What he personally owned amounted to only $20,000 because he donated virtually his entire personal fortune to The Hershey Trust Company to administer Milton Hershey School. To date, the Hershey Trust Company is still The Hershey Company's largest shareholder. 

I plan to post more about the Hershey School soon! 

Hershey's Track and Field Games

The Hershey Company has sponsored HERSHEY'S Track & Field Games for more than 30 years. This program has introduced more than 10 million children in 3,000 communities across the U.S. and Canada to the fun and rewards of physical fitness. Children ages 9-14 compete in various track and field events, starting at the local level and progressing to state meets and the selection of regional finalists. HERSHEY'S Track & Field Games culminate in the North American Final, held in Hershey, Pennsylvania. Each year, finalists from each region receive an all-expense-paid trip to Hershey to participate in the North American Final.

http://www.thehersheycompany.com/social-responsibility/commitment.asp

HSY Stock Price Updates

Last Week's Prices:

9/3/10:    $47.14
9/2/10:    $46.99
9/1/10:    $47.17
8/31/10:  $46.47
8/30/10:  $45.78

The relationship between Hershey and Mars....

Ever notice how a once harmonious relationship (marriage for example) can turn into a bitter rivalry when that partnership is severed?  Well, that's what happened to Hershey and Mars!  Just like any breakup, the word on the street varies a bit from one story to the next, but the basic facts remain the same.

Bill Murrie was President of Hershey from 1908-1947.  He had a son named Bruce.  Frank Mars was the founder of Mars.  He had a son named Forrest. 

Either Bruce or Forrest (the story differs), saw soldiers during the Spanish Civil War eating pieces of chocolate covered with a hard sugary coating. The coating preventing the candy from melting in the hot sun.  The two teamed up to create M&Ms.  (Mars and Murrie, get it?)  Hershey made the chocolate inside, and Mars made the candy coating.

Though the elder Murrie stopped serving as Sales Manager in 1908, he retained responsibility for major industrial customers....one of which was Mars. His relationship with Mars resulted in a new relationship between the companies during the pre-World War II years. Hershey had a contract to supply chocolate to the soldiers, and the industry anticipated a chocolate shortage developing during the pending war.  After wartime quotas ended in 1948, Forrest Mars maneuvered Bruce out of the partnership and went on to become Hershey's largest competitor.

Some external factors affecting Hershey....

With the big "health kick" that the United States and many other countries has gotten on, experts are raving about the benefits of dark chocolate.  This is a big opportunity for Hershey.  While they have had limited dark chocolate options in the past, they are now offering a full line of dark chocolate bars.  Some even have cranberries and almonds so they must be healthy!  (note the sarcasm here)  Taken directly from their website "It's a fact!  Dark chocolate is a natural source of flavanol antioxidants.  So now there's even more reason to enjoy these rich, delicious HERSHEY'S Dark Chocolates." 

Another opportunity for Hershey is the increased importance placed on holidays.  Can you really think of a holiday that chocolate is not appropriate for?!  You give it for birthdays, anniversaries, Valentine's Day, Christmas, Easter, Halloween, Saint Patrick's Day...... 

While Hershey is trying to put an opportunistic spin on the increased concern with health, they can't escape the fact that you can only make candy healthy to a certain point.  After all, it is still candy!  Obesity rates are increasing exponentially in the United States.  Doctors, TV show hosts, diet gurus, trainers at the gym, the weird lady two doors down with the goat living on her front porch, and even your mother are telling you to cut back on the fried foods and.....sweets!   

Another place that is hitting Hershey hard is costs associated with manufacturing and delivering.  Have you bought a gallon of milk lately?  What about gas?  The increasing costs of these are quite a threat for Hershey.  It costs more to get the ingredients to the manufacturing facility and more to get it back out to the end consumer than ever before. 

UK Sales Push

According to an article posted today on talkingretail.com, Hershey has appointed Euro Food Brands for a UK sales push.  EFB will be the official importer and distributor partner in the UK.  EFB believes that there are clear growth opportunities in the UK through both everyday purchasing and via seasonal and gifting occasions.  Stephen Barlow, Managing Director of Euro Food Brands, says: "Hershey's has a phenomenal potential in the UK market with such a portfolio of iconic brands." 

Looks like Hershey is not the only organization to think of their iconic brands as a competitve advantage....I'd say I have to agree with them!   

http://www.talkingretail.com/products/product-news/16138-hershey-appoints-euro-foods-group-for-uk-sales-push.html

A bit on Performance, Competitve Advantage, and Stategy....

Some key points regarding performance, competitive advantage, and strategy taken from The Hershey Company 2010 Annual Meeting of Stockholders held May 4, 2010. If you would like to look over the presentation, it can be viewed at:

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDQyMzF8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

Performance:

They state that they have had top-tier performance since adoption of new strategy in 2008. From 1/1/08 to 4/23/10, Hershey shares have out performed peer group. I am interested to see if I can find something outlining their strategy before 2008.

In 2010, they expect a Net Sales increase of at least 6% and an Adjusted Earnings Per Share-diluted increase in the low-to-mid teens.

Competitive Advantage:

Confectionery-an advantaged category
-High impulse purchases
-High household penetration
-High purchase frequency
-Responsive to merchandising
-Seasonal destination
-Low private label presence
-Recession resistant

Significant competitive advantages:
-Iconic brands
-Category leadership
-Dedicated direct sales force
-Proprietary go-to-market tools

Hershey is loved by customers and has a strong corporate reputation built on a unique heritage that is still at heart of the company today, both of which they feel also gives them a competitive advantage.


Strategy:

Hershey is evolving their supply chain. One way is thru reducing the number of manufacturing facilities and distribution centers for an expected savings on capital expenditures of $30 million to $60 million.

Their strategy places a great emphasis on innovation leading to enhanced consumer and category understanding and a developed disciplined process. They also place an emphasis on new product launches, both variations of current core products and introduction of new products/segments.

A little info on Hershey....

Milton S. Hershey was raised in rural central Pennsylvania, dropped out of school when he was 13 years old, and was nearly bankrupt by the time he was 30. He went on to “become not only one of America’s wealthiest individuals, but also a successful entrepreneur whose products are known the world over, a visionary builder of the town which bears his name and a philanthropist whose open-hearted generosity continues to touch the lives of thousands.”


Hershey’s has acquired several other companies over the years: H.B. Reese Candy Company (1956); San Giorgio Macaroni and Delmonico Foods (1966); manufacturing and marketing rights to English candy company Rowntree MacKintosh’s products (1970); Y&S Candies, makers of Twizzlers licorice (1977); Dietrich Corp.’s confectionery operations (1986); Peter Paul/Cadbury’s U.S. confectionery operations (1988); and Ronzoni Foods (1990).

“Today, The Hershey Company is the leading North American manufacturer of chocolate and non-chocolate confectionery and grocery products.” They export to over 90 countries, employee approximately 13,700, and have net sales in excess of $4 billion.

NYSE: HSY --8/27/10 Close: $47.09 Change: +$0.60

Why Hershey?

I chose to follow The Hershey Company because I love candy and the story behind the company!  Milton S. Hershey's story is quite inspiring.  My in-laws live 45 minutes from Hershey, PA, and I have to make a stop at Chocolate World every time I come up for a visit!  


NYSE: HSY
website:  http://www.thehersheycompany.com/