OFF THE SALES BLOCK, HERSHEY LOOKS AHEAD

Candy Marketer Plans to Improve Advertising, Launch New Products

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NEW YORK (AdAge.com) -- The attention in candyland is again on the candy as Hershey Foods' controlling trust last night voted to terminate its exploration of a sale of the company.

Despite a $12.5 billion offer from Wm. Wrigley Jr. Co. and a $10.5 billion joint offer from Nestle and Cadbury Schweppes, the Hershey Trust Co. -- amid political and legal uproar locally -- decided to reject sale offers and look for other ways to diversify its portfolio.

Analysts, who have been less concerned about Hershey's lackluster performance than about who might purchase the candy marketer, are back on track following the announcement, and Rick Lenny, the company's chairman, president and CEO, is back in the limelight as questions arise about how the company will now move forward.

"Hershey is strong

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enough to stand on its own two feet, but they need to get more aggressive with new products and generate strong internal growth," said Prudential Securities analyst John McMillin.

Chief marketing officer
Hershey's chief marketing officer, Wynn Willard, likely anticipating this week's announcement, in a conversation last week with Advertising Age offered up a plan to do just that, with improved advertising creative and a variety of new product entries.

Those initiatives will certainly be under much scrutiny now that sale talk has abated, and industry observers expect that the company's Oct. 17 earnings call will have to outline even stronger plans to jumpstart flat sales.

In a statement today, Mr. Lenny acknowledged the "significant disruption" to the company and its employees over the last few months, but said Hershey "remains a competitively advantaged market leader in an attractive category."

Mr. Lenny said the company has remained focused during the recent uncertainty and will work to capitalize on "the immense strengths that were so clearly evident to potential acquirers."

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