Hershey Co. made a
sweet profit this quarter by posting higher-than-expected results amid more competition from the combined
Wm. Wrigley Jr. Co. and Mars Inc., a recession and a rise in cocoa costs.
The Pennsylvania-based candy company, which is responsible for some tempting chocolate treats including Reese's Pieces, made a net profit of $82.2 million, up from
$54.3 million last year. Sales rose 2.6% to $1.38 billion.
In August Hershey announced a 10% price increase on its products to cope with higher cocoa costs. The company has also boosted its ad budget by 20% to retain customers, according to
Bloomberg.
"The financial market and credit crisis has not had a material effect on
our business operations or liquidity, to date. However, the increase in our
cost structure and uncertainties in the financial markets and in the broader
economy present challenges as we head into 2009," said Hershey CEO
David West in
a press release.
So far the advertising has worked to help keep Hershey ahead of Mars, whose $23 billion acquisition of Wrigley closed in October. Hershey's strategy going forward is to increase
advertising by about 40%, or
$30 million to $35 million, over the next two years.
Hershey also plans to expand outside the U.S. (West mentioned India, China and Brazil) where it lags behind Mars-Wrigley.
- Maria Woehr
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