The Hershey Company

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The Hershey Company
TypePublic
Traded asNYSEHSY
S&P 500 Component
IndustryFoods
Founder(s)Milton S. Hershey
HeadquartersHershey, Pennsylvania, U.S.
Area servedWorldwide
Key peopleJohn P. Bilbrey, (President and CEO)
ProductsList of products manufactured by The Hershey Company
RevenueIncrease US$5.671 billion (2010)[1]
Operating incomeIncrease US$905 million (2010)[1]
Net incomeIncrease US$510 million (2010)[1]
Total assetsIncrease US$4.273 billion (2010)[1]
Total equityIncrease US$938 million (2010)[1]
Employees13,700 (2010)[1]
Websitehersheys.com
 
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The Hershey Company
TypePublic
Traded asNYSEHSY
S&P 500 Component
IndustryFoods
Founder(s)Milton S. Hershey
HeadquartersHershey, Pennsylvania, U.S.
Area servedWorldwide
Key peopleJohn P. Bilbrey, (President and CEO)
ProductsList of products manufactured by The Hershey Company
RevenueIncrease US$5.671 billion (2010)[1]
Operating incomeIncrease US$905 million (2010)[1]
Net incomeIncrease US$510 million (2010)[1]
Total assetsIncrease US$4.273 billion (2010)[1]
Total equityIncrease US$938 million (2010)[1]
Employees13,700 (2010)[1]
Websitehersheys.com

The Hershey Company, known until April 2005 as the Hershey Foods Corporation[2] and commonly called Hershey's, is the largest chocolate manufacturer in North America.[3] Its headquarters are in Hershey, Pennsylvania, which is also home to Hershey's Chocolate World. It was founded by Milton S. Hershey in 1894 as the Hershey Chocolate Company, a subsidiary of his Lancaster Caramel Company. Hershey's products are sold in about sixty countries worldwide.[3][4] In addition, Hershey is a member of the World Cocoa Foundation.

Hershey is one of the oldest chocolate companies in the United States, and an American icon for its chocolate bar. It is one of a group of companies established by Milton Hershey. Other companies include Hershey Trust Company, and Hershey Entertainment and Resorts Company, which runs Hersheypark, a chocolate-themed amusement park, the Hershey Bears minor professional hockey team, Hersheypark Stadium and the Giant Center. Most of the employees for the factory come from the surrounding counties, towns, and boroughs, such as Lebanon County, Hummelstown, South Hanover, and Harrisburg.

History[edit]

After completing an apprenticeship to a confectioner in 1873, Milton S. Hershey founded a candy shop in Philadelphia, which failed six years later.[5] After trying unsuccessfully to manufacture candy in New York, Hershey returned to Pennsylvania, where he founded the Lancaster Caramel Company, whose use of fresh milk in caramels proved successful.[5] In 1900, after seeing chocolate making machines for the first time, Hershey sold his caramel company for $1,000,000[5] (equal to $28,060,000 today) and began to concentrate on chocolate manufacturing. He stated to people who questioned him, "Caramels are just a fad, but chocolate is a permanent thing."

In 1903, Hershey began construction of a chocolate plant in his hometown, Derry Church, Pennsylvania, which later came to be known as Hershey, Pennsylvania.[5] The town was an inexpensive place for the workers and their families to live. Milton treated the people well and provided leisure activities to make sure the citizens enjoyed themselves. The milk chocolate bars manufactured at this plant proved successful, and the company grew rapidly.

Milton built a milk-processing plant in the year 1896, so he could create and refine a recipe for milk chocolate candies. In 1899, three years later, he developed the Hershey process which is less sensitive to milk quality than traditional methods.

Hershey Store located in the Falls Avenue Entertainment Complex in Niagara Falls, Canada
Hershey's Times Square Store, Times Square, New York City (2008)
Hershey's Syrup, circa 1950s

In 1907, Hershey introduced a new candy, small flat-bottomed conical-shaped pieces of chocolate that he named "Hershey's Kiss". Initially they were individually wrapped by hand in squares of foil, and the introduction of machine wrapping in 1921 simplified the process while adding the small paper ribbon to the top of the package to indicate that it was a genuine Hershey product.[5] Now, 80 million of the candies are produced each day. Other products introduced included Mr. Goodbar, containing peanuts in chocolate, in 1925, Hershey's Syrup in 1926, semi-sweet dark chocolate chips in 1928, and the Krackel bar containing crisped rice in 1938.

Harry Burnett Reese worked at Hershey, beginning in 1917, as a dairyman for the Hershey Farms. In 1921 he went to work in the factory. By 1925, he had developed an assortment of candies which he was able to sell to department stores in Lancaster, advertised as "made in Hershey." In 1926 he built his own factory and then in 1941 with the wartime rationing of sugar, Reese focused all of his production resources on his own confectionery masterpiece, the peanut butter cup, which required less sugar than most other confections of the time. In 1956, Reese died, leaving the company to his six sons. In June 1963, Hershey Chocolate Corporation acquired Reese's company for $23.3 million at a time when Reese's sales were $14 million annually.[6]

Labor unrest came to Hershey in the late 1930s as a CIO-backed union attempted to organize the factory workers. A failed sit-down strike in 1937 ended in violence, as loyalist workers and local dairy farmers beat many of the strikers as they attempted to leave the plant. By 1940, an affiliate of the American Federation of Labor had successfully organized Hershey's workers under the leadership of John Shearer, who became the first President of Local Chapter Number 464 of the Bakery, Confectionery, Tobacco Workers, and Grain Millers Union. Local 464 still represents the Hershey workforce.

Shortly before World War II, Bruce Murrie, son of long-term president of Hershey's, William F.R. Murrie, struck a deal with Forrest Mars to create a hard sugar-coated chocolate that would be called M&M's (for Mars and Murrie). Murrie had 20 percent interest in the confection. The new confection would use Hershey chocolate during the rationing era during World War II. In 1948 Mars bought out Murrie's interest and would become one of Hershey's primary competitors.[7]

In 2007, the Chocolate Manufacturers Association in the United States, whose members include Hershey, Nestlé, and Archer Daniels Midland, lobbied the Food and Drug Administration to change the legal definition of chocolate to let them substitute partially hydrogenated vegetable oils for cocoa butter in addition to using artificial sweeteners and milk substitutes.[8] Currently, the Food and Drug Administration does not allow a product to be called "chocolate" if the product contains any of these ingredients.[9][10]

In December 2007, Philadelphia city councilman Juan Ramos called for Hershey's to stop marketing "Ice Breakers Pacs", a kind of mint, due to the resemblance of its packaging to a kind that was used for illegal street drugs.[11]

In September 2008, MSNBC reported that several Hershey chocolate products were reformulated to replace cocoa butter with vegetable oil as an emulsifier. According to the company, this change was made to reduce the costs of producing the products instead of raising their prices or decreasing the sizes. Some consumers complained that the taste was different, but the company stated that in the company-sponsored blind taste tests, approximately half of consumers preferred the new versions. As the new versions no longer met the Food and Drug Administration's official definition of "milk chocolate", the changed items were relabeled from stating they were "milk chocolate" and "made with chocolate" to "chocolate candy" and "chocolaty."[12]

Milton Hershey School (MHS)[edit]

Unable to have children of his own, Milton S. Hershey founded the Milton Hershey School in 1909 for orphans. In 1918, Milton S. Hershey and his wife, Catherine Hershey, donated all of their considerable wealth, of around 60 million dollars, to the boarding school upon Catherine. Hershey's death. The Hershey Trust Company is now the largest shareholder and beneficiary to the School. Before his death, Milton Hershey ensured the school would live on by donating 30% of all future Hershey profits to the school. Due to this generous donation by America's largest chocolate company, MHS now has over 7 billion dollars in assets, making it one of the richest schools in the world. Today, the Milton Hershey School provides free education, health care, counseling and a friendly home to 2000 orphans in financial need. The school's programs include sports, arts, religious studies, sciences, maths, language and many other subjects. School colors are gold and brown. Students must wear a uniform to class provided to them by the School to encourage equality. Their admissions is primarily based on age and financial need for the orphans. The school also provides "House Parents", which are hired couples, paid to take care of and nurture the students. The school's "fellowship" project provides students with Hershey employee visits to build long lasting relationships and provide career counseling. Additionally, the school is located in Hershey, Pennsylvania, a city created by Milton Hershey himself. The city offers security, a church, a postoffice and other services for the students. Many of its designs resemble Hershey chocolate products, such as the Hershey Kisses light posts. Most notably perhaps is the fact that Mr. Milton Hershey prohibited The Hershey Company from using the School as an advertisement or marketing strategy. The school's primary goal is to provide young orphans with the skills necessary to support themselves and their families in the future.

Manufacturing plants[edit]

Hershey Chocolate Factory, 1976.

The first plant outside Hershey, Pennsylvania opened on June 15, 1963 in Smiths Falls, Ontario, Canada and the third opened on May 22, 1965 in Oakdale, California.[13] In February and April 2007 Hershey's announced that their Smiths Falls[14][15] and Oakdale[16][17] plants would close in 2008, being replaced in part by a new facility in Monterrey, Mexico. The Oakdale factory closed on February 1, 2008.[18] Hershey chocolate factory in São Roque, Brazil was opened in August 2002.

Hershey also has plants in Stuarts Draft, Virginia; Lancaster, Pennsylvania; Hazleton, Pennsylvania; Memphis, Tennessee; Robinson, Illinois and Guadalajara, Mexico.

Visitors to Hershey, Pennsylvania can experience Hershey's Chocolate World visitors center and its simulated tour ride. Public tours were once operated in the Pennsylvania and California factories, which ended in Pennsylvania in 1973 as soon as Hershey's Chocolate World opened,[19] and later in California following the September 11, 2001 attacks, due to security concerns.[17]

On September 18, 2012, Hershey opened a new and expanded West Hershey plant. The plant was completed at a budget of $300 million.[20]

Other sales and acquisitions[edit]

In 1969, Hershey received a license from Rowntree's to manufacture and market Kit Kat and Rolo in the United States. As of September 2013, Hershey continued to make and market these brands in the U.S. under license from Nestlé, owners of the Rowntree brand.

In 1977, Hershey acquired Y&S Candies, founded in 1845, and became the makers of Twizzlers licorice candies. In 1986, Hershey's began a brief foray into cough drops when it acquired the Luden's cough drops brand. But by 2001, the brand had been sold to Pharmacia (now part of Pfizer),[21] and Luden's eventually became a product of Prestige Brands.[22] Hershey's kept Luden's 5th Avenue bar. In 1988, Hershey's acquired the rights to manufacture and distribute many Cadbury-branded products in the United States (except gum and mints, which are part of Mondelēz International). In 1996, Hershey purchased the American operations of the Leaf Candy Company from Huhtamäki.

In 1999, the Hershey Pasta Group was divested to several equity partners to form the New World Pasta company (now part of Ebro Foods).

On July 25, 2002 it became public knowledge that the Hershey Trust Company was seeking to sell its controlling interest in the Hershey Foods Corporation. The value of Hershey stock skyrocketed 25% with over 19 million shares trading that day. But over the following 55 days, widespread press coverage, as well as pressure from Pennsylvania Attorney General Mike Fisher, the community of Hershey, and Dauphin County Orphans' Court Senior Judge Warren G. Morgan, led to the sale being abandoned. The seven Hershey trustees who voted to sell Hershey Foods on September 17, 2002, for US$12.5 billion to the William Wrigley Jr. Company (now part of Mars Incorporated) were removed by Attorney General Fisher and Judge Morgan.[23] Ten of the 17 trustees were forced to resign and four new members who lived locally were appointed. The former Pennsylvania Attorney General, LeRoy S. Zimmerman, became the new chairman of the reconstituted Milton Hershey School Trustees. Mr. Zimmerman has publicly committed to having the Milton Hershey School Trust always retain its interest in The Hershey Company. If Hershey is sold, the rights to make and market Kit Kat and Rolo products in the U.S. would revert to Nestlé.

In December 2004, Hershey acquired the Mauna Loa Macadamia Nut Corp. from The Shansby Group.[24]

In July 2005, Hershey acquired the Berkeley, California based boutique chocolate-maker Scharffen Berger.[25] In November 2005, Hershey acquired Joseph Schmidt Confections, the San Francisco based chocolatier, and a year later, in November 2006, Hershey acquired Dagoba Organic Chocolate, a boutique chocolate maker based in Ashland, Oregon.

In December 2011, Hershey reached an agreement to acquire Brookside Foods Ltd., a privately held confectionery company based in Abbotsford, British Columbia.[26]

Hershey's chocolate is available across the United States, due to their wide network of distribution.[27] They have three mega distribution centers, with modern technology and labor management systems.[28]

Product recalls[edit]

Criticism[edit]

Hershey has been criticized for not having programs to ensure sustainable and ethical cocoa purchase, lagging behind its competitors in fair trade measures.[32] Regarding Hershey's corporate practices, the Global Exchange report comments that:

Hershey has no policies in place to purchase cocoa that has been produced without the use of labor exploitation, and the company has consistently refused to provide public information about its cocoa sources. Additionally, Hershey has made no move to shift to third-party certification for the cocoa that it sources from West Africa. No information is available from Hershey about how the money it has invested in various programs in West Africa has actually impacted reductions in forced, trafficked, and child labor among the suppliers of its cocoa. Finally, Hershey's efforts to further cut costs in its cocoa production has led to a reduction in good jobs in the United States.[33]

The "The Raise the Bar, Hershey! Campaign" was launched in September 2010 by Global Exchange, Green America. the Oasis Trust, and the International Labor Rights Forum. The purpose of the Raise the Bar Campaign is to pressure Hershey to commit “to take immediate action to eliminate forced and child labor … from Hershey’s cocoa supply”; “to sourcing 100% Fair Trade Certified™ cocoa beans by 2012 for at least one of its top five selling chocolate bars … making at least one additional top five selling bar 100% Fair Trade Certified™ every two years thereafter”; and that “the majority of Hershey’s cocoa across all products will be Fair Trade Certified™ by 2022.“ Pressure was particularly directed at Whole Foods Market, which announced on October 3, 2012 that it would cease carrying Hershey's Scharffen Berger line.[34] The Campaign stated that "Whole Foods’ decision follows more than 40 natural food retailers and coops publicly expressing concern about carrying Scharffen Berger and Dagoba products as a consequence of the giant chocolate maker’s refusal to address child labor in its supply chain."[34] The same day, Hershey's announced that "it will source 100 percent certified cocoa for its global chocolate product lines by 2020 and accelerate its programs to help eliminate child labor in the cocoa regions of West Africa."[35]

Use of foreign student labor[edit]

In August 2011, the main distribution center for Hershey candies was subjected to a strike by about 400[36] young foreign workers brought to the United States under the J1 "cultural exchange" visa program. The center in Palmyra, Pennsylvania, was run for Hershey by Exel based in Ohio.[37] Exel in turn subcontracted the staffing of the center to another firm SHS OnSite Solutions based in Lemoyne, Pennsylvania. The students were recruited by yet another organization called the Council on Educational Travel (CETUSA).[38]

To the students, CETUSA promised:

You will gain valuable work and life experience, expand your resume, improve your English, have opportunity to travel in the U.S., make great memories and form lasting relationships. No matter where you end up in the U.S., your Work and Travel Program is sure to be a summer you will never forget![38]

The students paid CETUSA up to $6,000 to participate in the program. The students came from countries such as Costa Rica, China, Mongolia, Kazakhstan, Moldova, Poland, and Romania.[39] One said, "I spent some of the worst moments of my life during that exchange."[40]

As the strike made national news, Hershey pressured its contractors to provide the students with a week of paid vacation to allow them to see America. Hershey, Exel, SHS OnSite Solutions and CETUSA all removed any mention of the strike from their web sites.

In February 2012, press reports indicated that the Occupational Safety and Health Administration fined Exel $283,000. The company failed to report 42 serious injuries in the period from 2008 to 2011. The agency found that Exel had deliberately failed to meet reporting requirements. Hershey spokesmen pointed out the Hershey Corporation was not cited, just the company they hired to run its operations in the Hershey-owned facility.[41]

In November 2012, the federal government fined the three contractors $143,000 and charged them for unpaid wages, an amount totaling $356,000. The Hershey company refused to answer questions concerning the settlement, referring reporters to the contractors who were largely unavailable.[42]

See also[edit]

References[edit]

  1. ^ a b c d e f "2010 Form 10-K, The Hershey Company". United States Securities and Exchange Commission. 
  2. ^ Preparedfoods.com. Retrieved June 30, 2006.
  3. ^ a b Booksense.com. Retrieved June 30, 2006.
  4. ^ "The Hershey Company: NYSE:HSY quotes & news - Google Finance". Google. Retrieved August 8, 2012. 
  5. ^ a b c d e Reference For Business.com. Retrieved June 30, 2006.
  6. ^ Reese, Andrew (2008). REESE'S Peanut Butter Cups: The Untold Story. iUniverse. ISBN 978-0-595-48707-3. 
  7. ^ "Murrie, William F.R.; 1873–1950", hersheyarchives.com. Cf section "The Story of M & Ms"
  8. ^ Bragg, Lynn (2007). "Letter to CMA from President (pdf)" (PDF). Archived from the original on June 4, 2007. Retrieved June 8, 2007. 
  9. ^ "Adopt Regulations of General Applicability to all Food Standards that would Permit, within Stated Boundaries, Deviations from the Requirements of the Individual Food Standards of Identity". U.S. Food and Drug Administration. Retrieved June 9, 2007. 
  10. ^ "2007P-0085 Appendix C Changes Allowed to Modernize Food Standards While Retaining The Basic Nature and Essential Characteristics of Standardized Food" (PDF). U.S. Food and Drug Administration. Retrieved June 9, 2007. 
  11. ^ Porter, Jill (December 5, 2007). "Hershey's int/drug: Kisses, disses". Philadelphia City News. 
  12. ^ Coffey, Laura (September 19, 2008). "Chocoholics sour on new Hershey's formula". MSNBC. Retrieved June 10, 2009. 
  13. ^ Hershey's.com. Retrieved March 10, 2008.[dead link]
  14. ^ "Smiths Falls will fight to keep Hershey plant open, mayor vows". Canadian Broadcasting Corporation. February 16, 2007. Retrieved September 26, 2012. 
  15. ^ "Hershey confirms Smiths Falls plant will close". Canadian Broadcasting Corporation. February 22, 2007. Retrieved September 26, 2012. 
  16. ^ "Hershey's To Close Oakdale Plant". KCRA 3 (NBC) (Hearst Television, Inc.). April 30, 2007. Retrieved July 20, 2011. 
  17. ^ a b Salerno, Christina (May 1, 2007). "Hershey Closing". The Modesto Bee (McClatchy Corp.). Archived from the original on May 2, 2007. Retrieved July 20, 2011. 
  18. ^ Salerno, Christina (February 2, 2008). "Employees get teary eyed as the last Reese's roll off Hershey line". The Modesto Bee (McClatchy Corp.). Retrieved July 20, 2011. 
  19. ^ "Hershey Community Archives". Hersheyarchives.org. July 20, 2011. Retrieved July 20, 2011. 
  20. ^ "Hershey unveils expanded West plant". Lebanon Daily News. September 18, 2012. Retrieved September 26, 2012. 
  21. ^ Hersheys.com. Retrieved September 29, 2006.
  22. ^ "Luden's Home Page". Ludens.com. Retrieved September 26, 2012. 
  23. ^ "10 Board Members to Leave Hershey's Charitable Trust". The New York Times. November 15, 2002. Retrieved July 4, 2013. 
  24. ^ Standard and Poor's 500 Guide. The McGraw-Hill Companies, Inc. 2007. ISBN 0-07-147906-6. 
  25. ^ Sfgate.com. Retrieved June 30, 2006.
  26. ^ Business Wire (December 8, 2011). "Hershey Reaches an Agreement to Acquire Brookside Foods Ltd.". Business Wire. Retrieved August 8, 2012. 
  27. ^ "Tricks and Treats (Special)". fool.com. October 26, 1999. Retrieved September 26, 2012. 
  28. ^ The Supply Chain & Logistics Institute # Chris Malon, Hershey Foods. Retrieved July 3, 2006.
  29. ^ "Hershey products pulled off Canadian shelves". Canadian Broadcasting Corporation. November 13, 2006. Retrieved September 26, 2012. 
  30. ^ "Soy not confirmed as salmonella source in Hershey recall". Canadian Broadcasting Corporation. November 17, 2006. Retrieved September 26, 2012. 
  31. ^ Health Canada Advisory. Retrieved November 13, 2006.
  32. ^ "Hershey Dominates US Market, but Lags Behind Competitors in Avoiding Forced Labor, Trafficking and Child Labor | International Labor Rights Forum". Laborrights.org. September 13, 2010. Retrieved August 8, 2012. 
  33. ^ Nerenberg, Jenara (October 5, 2010). "Hershey Gets a Not-So-Sweet Kiss for Fair Trade Month". Fast Company. Retrieved August 8, 2012. 
  34. ^ a b "Whole Foods Drops Hershey’s Scharffen Berger Chocolates Over Child Labor Issues". Green America. October 3, 2012. Retrieved February 8, 2013. 
  35. ^ "Hershey to Source 100% Certified Cocoa by 2020". The Hershey company. October 3, 2012. Retrieved February 8, 2013. 
  36. ^ Adams, Susan (April 18, 2012). "Hershey Fudges Labor Relations Image". Forbes. Retrieved September 26, 2012. 
  37. ^ "Foreign guestworkers, union members protesting Hershey Co. policies for foreign workers". PennLive.com. Retrieved August 8, 2012. 
  38. ^ a b Kammer, Jerry (August 23, 2011). "Hershey Leaves a Bitter Taste for Foreign Students | Center for Immigration Studies". Cis.org. Retrieved August 8, 2012. 
  39. ^ Jamieson, Dave (August 19, 2011). "Hershey Labor Controversy Investigated By Legal Experts". Huffington Post. 
  40. ^ Preston, Julia. "Hershey Exchange Student Warnings were Ignored". The New York Times, October 17, 2011
  41. ^ Preston, Julia. "Hershey's Packer Fined by OSHA for Safety Violations". The New York Times, February 22, 2012
  42. ^ Wenner, David (November 14, 2012). "Feds say they will collect back wages for foreign students who claimed exploitation at Hershey warehouse". Patriot News. Retrieved December 15, 2012. 

External links[edit]