Hershey’s vs. Mars

1. Hershey’s vs. Mars MGT 250 IriniBuaStephanie DeodatSawhillBusreCharlie DiMaggioPiji ChenKarina Moscoso

2. History – Hershey’s • In 1894, Milton Hershey made a decision to open a company to produce chocolate. It was named Hershey Chocolate Company and was located in Lancaster, Pennsylvania. In 1900, the company originally began producing milk chocolate in bars, wafers, and other shapes. Chocolate being a “luxurious” item, Hershey made it affordable for all. • By 1905, Hershey’s Co. became a complete success. Milton Hershey built a new factory in Derry Township, PA, where ports provided imported sugar and cocoa beans, and dairy farms resided in the area. • In 1907, Hershey’s Kisses chocolates were introduced as well as Mr. Goodbar Candy Bar (1925), Hershey’s Syrup (1926), and the Krackel Bar (1938).

3. History - Hershey’s cont. • When World War II began, Hershey’s Co. started producing a survival ration bar for military use, where they earned five Army-Navy “E” Production Awards for their contributions. • H.B. “Harry” Reese’s Candy Company and Hershey’s Chocolate Corp. had a good relationship. When Reese died in 1956, Reese’s Co. was sold to Hershey’s. • Renamed to Hershey Foods Corporation in 1968, it expanded to product lines and food products. • Today, Hershey Company is one of the leading manufacturers of chocolate and non-chocolate products in North America. Hershey’s Co. also have expanded worldwide and have operations in more than 90 countries.

4. History – Mars • Mars began in 1911 as the Mar-O-Bar Co., a snack food business founded by Frank C. Mars of Tacoma, Washington, who made a variety of buttercream candy in his home • In 1920, Mars relocated to larger quarters in Minneapolis, where Milky Way bars (1923) were created. Milky Way bars became an instant success. • Later, Mars moved to Chicago in need of more space because of expansion in 1929. • In 1930, Snickers brand (without the chocolate coating) and 3 Musketeers (1932) is launched. Mars Limited is renamed Mars Confectionery.

5. History – Mars cont. • In 1932, Forrest Mars (Frank Mars’s son) goes to the United Kingdom to pursue his dream of building a business. While there, Mars enters into the Petcare business. He later returned in 1940 to the United States and founded M&M Limited in Newark, New Jersey, to manufacture chocolate candies in a sugar shell. • In 1943, Mars ventured into the main meal business, which included a wide selection of rice products, including whole grain, savory, boil-in-bag, fast cook, instant, and frozen rice as well as other products. It was named Uncle Ben’s Incorporated

6. History – Mars cont. • Throughout the years, Mars, Inc. went nationwide and worldwide with their confectionery, pet food, and other food products in more than 100 countries. • In 2009, Mars, Incorporated becomes the first global chocolate company to commit to fundamentally changing the way sustainable cocoa farming practices are advanced.

7. TheCompetition Competition between Hershey Co. & Mars Inc.

8. Their Competition • Aside from themselves, both Hershey Co. and Mars Inc. have the same two main competitors within their targeted industry. • Their two main competitors within the candy and the snack food industry are • Nestlé S.A. • Mondelez International Inc.

9. The Rivalry • The Hershey Company and Mars Inc. have always been fierce competitors. They have clashed with each other in the past and will continue to do so in hope of gaining market share. • Although both Hershey Co. and Mars Inc. both produce and manufacture a vast variety of products, their competitive rivalry comes mainly from their candy products with Hershey’s Kisses and Mars’ M&Ms being the top contenders.

10. Top Company Brands

11. America’s Favorite Chocolate • In the constant battle of the candy brands, Hershey's Kisses are the top rated chocolate candy brand for the fifth time in eight years. • America's favorite little chocolate candy unseats one of its most enduring competitors, M&M's Plain Chocolate Candy, which has occupied the top spot whenever Hershey's Kisses doesn't. • Hershey’s Reese’s Peanut Butter Cups has consistently appeared in the top ten list over the past eight years and for the first time has had a rated higher than M&Ms.

12. America’s Top Chocolate Brands • This year, Hershey's and Mars candy products dominate the top chocolate brands. • Hersey's brands include Hershey’s Milk Chocolate Candy Bars, Kit Kat Bars, and Reese's Pieces, which came top • Within the Mars family, Peanut M&M's, Snickers, and Twix also make the list of top brands.

13. Top non-Chocolate Candy Brands • As for the non-chocolate candy, Mars’ Life Savers Candy takes the top spot, while Hershey’s Jolly Rancher Candy came in second. Other non-chocolate brands making the top of the list include Tootsie Pops, Skittles, and Starburst. • Mars Inc. trumps the top gum brands as they own Extra Gum which leads the top of the Brands, as well as 5 Gum, and Orbit.

14. Hershey’s Strengths • Huge market share in North America • Marketed with more than 50 brand names • High Quality(85% of their chocolate lineup is pure) • Good Corporate responsibility and community involvement

15. Hershey’s Weaknesses • Centralized management; No divisional manager. • Not able to establish global channels of distribution. • Less than 10% sales are outside of U.S. • Mostly chocolate/candy based products.

16. Mars Inc. Strengths • Large global presence • Named one of best companies to work for • Diverse products • High brand preference to consumers (M&M) • Big community involvement

17. Mars Inc. Weaknesses • Lack of innovation to create new candy bars • Too many products • Milky Way’s has low sales percentage on U.S • Private-owned Company

18. Management – Hershey’s   • Invest in programs and education that enable  employees to achieve and maintain healthy lifestyles. • Wellness programs include: The Chocolatetown Challenge, “The Old Switcharoo” , and a walk-to-run 5K clinic. • There were no work-related fatalities at any Hershey facility in 2010; Hershey has not had an employee work-related fatality in the past 25 years.

19. The Chocolatetown Challenge  • A fitness and wellness challenge designed to promote health, and friendly competition among the employees, retirees and families of seven companies within the Hershey, Pennsylvania community.  • Has taken place annually since 2008.  • This year’s event included a 5k race and 1 mile fun/run walk, physical fitness activities and a health fair.

20. The Old Switcharoo • Designed to shift employee’s focus away from big lifestyle changes that may be overwhelming to smaller, everyday changes. •  Participants swap a less healthy habit like watching television for a healthier habit like walking 10 minutes

21. Other Wellness Programs • “WaterWorks”-  Provides educational resources to help participants understand how much water they need and how they can get hydration from other sources. • “Spring into Fitness”- A wellness initiative to jumpstart fitness for the spring and summer months. • “Get Fit on Route 66,”- Participants trace the famous route of the legendary highway by tracking the amount of time they spend exercising.

22. Afinity groups • Are culturally centered, life stage oriented and personally and professionally specific. • Include: • -Asian Affinity Group • - African American Affinity Group • - Hispanic Affinity Group • - Network of Young Professionals • - PRISM (GLBT Affinity Group) • - Sales Diversity Council • - The Women’s Council

23. The Woman’s Council • Have created  lounges to most Hershey, Pennsylvania office buildings for mothers who have returned to work but are still nursing. • Created an internal mentoring program that matches protégés with mentors to help employees develop and achieve career and personal growth goals.

24. CORPORATE SOCIAL RESPONSIBILITY NETWORK • To date, the CSR Network has: - Initiated a program on commuter services - Established the company’s page on Freecycle @ Work - Organized a recycle event analyzing employee participation in corporate recycling efforts - Mobilized donations to a food bank in need

25. Management - Mars Inc. • Employees and even the president have to punch in every day at most Mars sites , if you're late, you get docked 10% of your pay.  • The company encourages  the idea of developing cross-division talent .If you've had enough of Skittles brand management experience, you might find yourself working in one of the companies other brands like the pet food division • Employees have the freedom to experiment with ideas and management has the patience to train.

26. “Five Principles of Mars” • Quality •  Responsibility •  Mutuality •  Efficiency • Freedom.  • The principles are on the walls of its 400 offices and manufacturing sites in 73 countries

27. Community Involvement • Mars Volunteers : Employees get paid time off to clean parks, aid medical clinics, and plant gardens • Mars Ambassadors: Highly competitive  •  Only a select few  spend up to six weeks working with Mars-related partners in remote areas; for example, six employees spent a week in Ghana with growers of cocoa beans.

28. Hershey’s Marketing Strategy Motto: “Bringing sweet moments of Hershey happiness to the world every day”

29. Hershey Co. • The Hershey Company makes well-known chocolate and candy brands such as Hershey's, Kisses, Reese's peanut butter cups, Almond Joy, Twizzlers, as well as Mounds candy bar, York peppermint pattie, and Kit Kat wafer bars. • Hershey also makes grocery goods and pantry items including baking ingredients, chocolate syrup, cocoa mix, cookies, snack nuts, mints, bubble gumand even beverages.

30. Marketing Strategy – Hershey’s • Selection of the right target market when it comes to promoting a certain product is vital. • Hershey’s chocolate was originally known to target only children, however, over the last decade, marketing strategies have been more focused towards adult. • The introduction of the Hershey’s “kiss” has been dramatically • Studies show that 55 percent of chocolate consumption is by adults

31. Marketing Strategy – Hershey’s cont. • Hershey highly relies on in store promotion as well the quality and history of their products to attract customers • Bite size candies are more appealing to adults because they feel less guilty about indulging their sweet tooth. • Hershey had dramatically decreased advertising spending but after great criticism released a new marketing plan due to increased competition by companies such as Mars Inc.

32. Marketing Strategy – Hershey’s STRENGTHS WEAKNESSES Inflation Higher public awareness towards the health effects of consuming to much chocolate Decline in the Asian market Increase in variable and fixed expenses • Export to over 90 different countries • Have their own theme park • Leader in the United States in for dark and premium chocolate segments • Have their own cookbook which shows how to use Hershey’s chocolate in different recipes

33. Marketing Strategy

34. Mars Inc. • Mars makes worldwide favorites such as M&M's, Snickers, and the Mars baras well as 3 Musketeers, Dove, Milky Way, Skittles, and Twix. • It also owns and produces the Klix and Flavia beverage systems, Combos and Kudos snacks, as well as Uncle Ben's rice, and pet food. • Mars owns the world's largest chewing gum maker Wm. Wrigley Jr. Company as well, after recently buying it for around 23 Billion.

35. Marketing Strategy – Mars Inc. • Mars Inc. relies heavily on digital advertising such as commercials • Targets all age groups with a variety of products besides chocolate • Mars chocolate is drastically growing in popularity due to heavy focus on advertising products such as M&M’s

36. Marketing Strategy - Mars Inc. Strengths Weaknesses Lack of creativity when it comes to creating new types of chocolates Most advertising money is aimed towards M&M’s Many products that it has to promote Hershey’s still leads in US chocolate production and consumption • Mars is a highly recognized and preferred brand by customers • Large variety of products • Highly known and demanded in international markets • Well known advertising

37. “Anything for Love” • Mars Super Bowl AD

38. Revenue/Statistics

39. Hershey Co. Annual Earnings

40. Hershey Co. Annual Revenues

41. Hershey Co. Share Price Performance (previous 10 years)

42. Increasing Dividend Payout • Hershey pays a regular quarterly dividend of 38 cents per share, representing an annual dividend yield of 2.1%. • The company has been raising the payout every year since 2010, including a 10% increase earlier this year.

43. Attractive Valuation • Hershey currently trades at a forward price-to-equity (P/E) of 22.25x, in line with the peer group average. • Also on a price-to-sales basis the stock is trading in line with the peer group average of 2.57x. • However, the company has a trailing 12-month return on equity (ROE) of 76.3%, which is significantly above its peer group average of 6.7%.

44. Mars Inc. Revenue

45. Mars Inc. Revenue 2012

46. Mars Inc. Chocolate Statistics • Was the first global chocolate company to commit to sourcing all of their cocoa from certified supplies by 2020. • In 2011, they purchased 10% of their cocoa from certified sources, and in 2012 they stated they expected to exceed 20% and become the world’s largest user of certified cocoa. • They currently buy cocoa certified by the Rainforest Alliance, UTZ Certified and Fairtrade.

47. Mars Inc. Goals • TARGET: Reduce direct fossil-fuel energy use and greenhouse gas emissions by 25% by 2015 from a 2007 baseline. • PROGRESS IN 2011: Fossil-fuel based energy use reduced by 6% between 2007 and 2011. Greenhouse gas emissions reduced by 5% between 2007 and 2011.

48. Mars Inc. Goals Reduce water use TARGET: Reduce water use by 25% by 2015 from a 2007 baseline. PROGRESS IN 2011: Water use reduced by 18%.

49. Mars Inc. Goals Zero waste to landfill sites TARGET: Achieve zero waste to landfill by 2015. PROGRESS IN 2011: Waste to landfill reduced by 51%.33 of 126 sites* achieved zero waste to landfill in 2011.

50. Hershey’s vs. Mars To conclude our presentation, Hershey’s Co. and Mars Inc. both are prosperous food companies. However, they each dominate in different areas in the food industry. Hershey’s is more successful with the chocolate and candy division, while Mars is much more diversified ranging from chocolate/candy to pet food products, etc. They’ll continue to be fierce competitors against one another.