Such tailwind has prompted Hershey’s Q1 2018 net sales to grow 4.9% year-over-year, reaching $1.97bn, according to company’s latest earnings results.
Core brands drive revenues
“Our core brands continue to drive growth, and the variety brands we activated are responding nicely to the renewed investment,” said Buck.
During the period, a new Reese’s manufacturing line started operating in Hershey, “unlocking additional capacity and new opportunities for growth… Our Reese’s Outrageous instant-consumable innovation is on track for a May launch.
“We also recently broke ground on our new KitKat manufacturing line in Hazleton, Pennsylvania,” added Buck. “Hershey’s Gold is off to a great start and repeat is encouraging.”
Hershey’s Easter sales declined approximately 10% versus last year due to the fact the holiday season was 15 days shorter, noted the company.
“Given the shift, April retail takeaway is expected to be down significantly versus prior year,” said Buck. “We expect April year-to-date retail takeaway to be slightly down versus prior year.”
Amplify acquisition right on track
Hershey said the integration of Amplify Snacks “is proceeding nicely” since it acquired the SkinnyPop owner towards the end of last year.
The Amplify business provided a 340 basis point benefit to Hershey’s Q1 growth, according to Buck.
“SkinnyPop ready-to-eat popcorn year-to-date retail takeaway grew 3.1% versus the same period a year ago. This was driven by strong base sales growth of 6.9% with velocities improving versus 2017,” she said.
However, “these base sales gains were partially offset by planned declines in low ROI (return on investment) promotional activity,” Buck noted. “We have line of sight to distribution expansion that we expect to help further drive second-half growth.”
Growth comes back in China
Hershey’s quarterly net sales from its Chinese market finally started growing again after declining for nearly a year.
“Our China performance continues to sequentially improve as we execute our Margin for Growth initiative with constant currency net sales up approximately 1% in the first quarter,” said Buck.
“We had a solid Chinese New Year, growing share in our focus SKUs for the first time in several years,” she added.
The overall international market net sales increased 8.8% in Q1 driven by sales increase in Mexico, Brazil and India, which grew a combined 12% on a constant currency basis, reported Hershey.
The company’s North America net sales, on the other hand, increased 4.4% during the period compared to last year.
Hershey’s organic net sales in full-year 2018 are expected to grow by 2%, said Buck.