NACS 2016

Hershey: C-store has ‘large’ growth potential for seasonal confections

14-Nov-2016 - Last updated on 14-Nov-2016 at 13:06 GMT

Hershey plans more seasonal confectionery products in US c-stores

Related tags Hershey Fudge

Seasonal confectionery c-store distribution is underdeveloped compared to other channels, despite the fact that the household purchase of seasonal confectionery is increasing,

The number of US households buying seasonal confections had increased by 74.4% during 2015, and by 73.6% last year, according to the most recent aggregated Nielsen data.

Household holiday purchases are expected to increase further, Hershey’s collaborative planning strategist Ganesh Harinath, told ConfectioneryNews at the NACS (National Association of Convenience Stores)Show recently in Atlanta, Georgia.

“In fact, seasonal sales for the convenience channel outpace the [confectionery] industry. So if you look at Valentines, Easter and Halloween, you will see that convenience is at the top level, dominating sales [among all channels],” he said.

Hershey data shows that seasonal confectionery sales at US c-stores during Valentine's have increased 17.2% in the last six years, compared to 2.5% in mass channel, and 1.4%, drug channel. Meanwhile, c-store confectionery sales have also increased by 3.1% in the last six years, compared to mass channel, 1.1%, and drug, 2.6%.

“Convenience stores are really where the lion’s share of these sales are coming from,” Harinath said.

C-store has a $112m opportunity

“C-store distribution is underdeveloped in seasonal king and standard bar versus other channels, which means we have about $112m opportunity if we do it right,” Harinath said.

Hershey’s Kisses Kissmas Chocolates

Hershey has partnered with four retailers for limited-edition holiday-themed Hershey’s Kisses Milk Chocolates:
• Hershey’s Kisses Kissmas Gift Chocolates – Sold exclusively at CVS. Available in 9 oz. (SRP $4.49).
• Hershey's Kisses Santa Hat Chocolates – Sold exclusively at Target. Available in 11 oz. (SRP $3.49).
• Hershey’s Kisses Kissmas Sweater Chocolates – Sold exclusively at Walmart. Available in 11 oz. (SRP $3.24).
• Hershey’s Kisses Kissmas Tree Chocolates – Sold exclusively at Kroger and the Kroger Company family of stores. Available in 11 oz. bag (SRP $3.50).

As for Hershey’s everyday products, the company has around 50.6% of them developed for c-stores. In contrast, only 29.1% of Hershey’s seasonal products are available in c-stores.

“Looking at rest of market versus c-stores, you see that, for seasonal, we do less business than we should,” he added. “Seasonal sales are incremental to our business.”

In addition, Harinath pointed out that the underperforming seasonal sales in c-stores provides a large growth opportunity for Hershey.

Looking across the number of stores ordering [during the major holiday seasons] as an example, there is a mere fraction of roughly 150,000 total orders in the channel, he added, and those orders are worth $70m.

Targeting early seasonal consumers

Harinath said Hershey has “deep partnerships” with its convenience channel customers, and part of the company’s seasonal strategy is “to understand how to innovate items that can fit into their plan.”

Hershey has introduced birthday-themed items for brands, including Reese’s and Kisses at Walmart earlier this year to expand its seasonal offer, this site previously reported.

However, “the big thing to keep in mind is that a lot of consumers began their plan for the season early,” Harinath warned.

“So as long as we can get our items into the right channels at the appropriate time of the year, we have a greater chance of impacting overall sales.”