Dive Brief:

• Hershey has “stepped …up” its innovation plans for 2024, CEO Michele Buck recently told analysts. 
• Buck said the Reese’s and Skor bar maker’s “higher levels of innovation” will play a larger role in driving its overall business as well as shelf, displays and additional placements at retail.
• The sweet and salty food maker, which has benefited from an increase in prices, has seen volumes slow as consumers push back on spending for many food and beverage offerings — a trend that has impacted most companies in the CPG space. 

Dive Insight:

During the pandemic and recent supply chain disruptions, Hershey prioritized keeping up with demand for its products and maintaining service with retailers. While the Pennsylvania-based company continues to value those attributes, it now appears to be more comfortable accelerating its innovation lever.

Hershey has an enviable portfolio of sweets and salty snacks, with innovation a key part of growing its business and maintaining consumer interest in its brands.

One popular confection that has drawn a meaningful amount of innovation attention at Hershey is its popular Reese’s brand. The century-old item, with more than $3 billion in annual sales, has seen its cups stuffed with everything from Reese’s Pieces and pretzels to potato chips and Reese’s Puffs Cereal. It’s also recently extended the peanut butter and chocolate brand into animal crackers and popcorn.

Buck said Hershey’s new product, Reese’s Caramel, is their latest innovation. She also mentioned that the company hasn’t been able to fully capitalize on the growth in the gummies category, but they are planning to improve their position in this area next year.

For Hershey and its competitors, innovation is important to stay relevant to shoppers. A robust pipeline of new on-trend offerings could not only convince some individuals to open their pocketbooks to try it, but potentially rekindle their interest in the brand after going some time without eating it. 

Still, with consumers battling higher interest rates and price hikes across the board, innovation might be the key for a company to keep a shopper whose money doesn’t have as much buying power as it once did. Hershey management said its sales team is working with retailers to begin shipping new products in the first quarter of next year.

“We will need to wait until 2024 to see improvement, driven by some of our stronger innovation that will really help the everyday business,” Buck said.

A major part of Hershey’s ability to innovate not only comes from owning brands that are conducive to it, but efforts it has taken to grow its production capacity.

Last year, it announced plans to build a new 250,000 square-foot chocolate facility in the town of Hershey to support many of its iconic brands. The project is part of an ongoing $1 billion investment goal to improve its supply chain and meet future growth. And in April, it purchased two popcorn operations from a co-manufacturer to increase production capacity and flexibility for its SkinnyPop brand.