J.P. Bilbrey, CEO of The Hershey Co., works under daily pressure to sell more products outside the United States.
Derry Twp.-based Hershey is the number one candy company in North America. But investors demand growth, and growth in foreign markets -- where Hershey isn't number one -- is viewed as the difference between a company whose revenues and stock price continue to rise or an also-ran.
So it might come as a surprise to hear Bilbrey explain that Hershey is no longer a candy company. It's a "knowledge" company that makes candy.
That self-view is a key part of Hershey's strategy for growth, both in and outside North America.
It has allowed Hershey to form tight relationships with major retailers and participate in discussions involving much more than Hershey's Kisses and Trick-or-Treat.
"This has enabled the Hershey Co., which was a confectionery company before, to manage the entire front end of Walmart," Bilbrey said. "We manage Walmart on the front end for Coca-Cola, Pepsi, for Duracell, for ourselves, for all our competitors.
"So when they talk about how do we set up the front end of the store, how do we want people to approach the lanes, what products should we have there, we are the ones they turn to consult with," he said.
Hershey also works with major retailers -- such as CVS and Target -- to plot how they will help each other grow.
"It means we're sitting down with the leaders of these companies and not talking about what they're going to buy in July, we're talking about what they want to do over the coming five years," Bilbrey, 56, said during a recent interview.
The evolution was quickened by Hershey's failed attempt to buy European chocolate maker Cadbury a few years ago.
The pursuit of Cadbury sprang from Hershey's desire to get bigger in order to better compete in markets outside North America.
That route was cut off when Kraft stepped in and bought Cadbury. Hershey was left to figure out not only how it would compete against Kraft-Cadbury, but also against vast food and candy maker Nestle, and Mars-Wrigley, which had recently joined forces.
"I said we are going to be smarter than anybody. That's our scale advantage," Bilbrey said.
This evolution to a company that views information and consumer insights as its most valuable commodity also reflected Hershey's realization, around 2008, that its strategies for growing its brands and sales were no longer adequate.
Sales had always been good, and the company was lauded for its well-tuned distribution system. Most importantly, Hershey's roster of products included an assortment of household names.
Yet there were concerns about the company strategy at the time of adding new flavors and varieties and a multitude of pack types. There were signs that approach would no longer work. Retailers, for one thing, sought simplicity and lack of clutter on their shelves.
Hershey further concluded it wasn't maximizing market penetration and potential sales. So it shifted the focus to attaining a better understanding of customers, and of what makes them buy.
Hershey now has offices in Bentonville, Ark., home of Walmart, where Hershey managers participate in strategic discussions with managers of the world's largest retailer. It requires confidentiality agreements and walls of separation between Hershey employees, including some who become privy to information about Walmart they can't share even with Bilbrey.
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