For Sale?: Hershey throws muscle back into marketing

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As Nestle and others eye the potential acquisition of Hershey Foods, the candy marketer is putting a renewed emphasis on marketing as it implements President-CEO Rick Lenny's year-old "value-enhancing strategy." Hershey VP-Chief Marketing Officer Wynn Willard said he expects this to be a watershed year in ad spending and innovation, sale or no sale.


Among the initiatives are plans to increase marketing spending by double-digits on top brands, to launch more effective, targeted campaigns and to introduce a slew of new products. But since July, when the controlling Hershey Trust said it would explore a sale of the company as a way to diversify its $5.4 billion portfolio, Wall Street has been less concerned about candy sales than about the sale of candyland.

"I suppose life will go on whether they're a division of Kraft [Foods] or Nestle, and they'll still have to market their products. But to shareholders that's not what's important at the moment," said Banc of America Securities analyst Bill Leach.

Still, Prudential Securities' John McMillin suggested that focusing on the business and maintaining a strongly run organization will help Hershey executives "make themselves look more attractive, if they are acquired, to be the managing equity."

"The vision we have for building the business and refreshing [Hershey] brands remains unchanged whether we're doing it for different ownership or not," Mr. Willard said.

Although Mr. Lenny spoke of the need to leverage scale brands and evaluate ad copy nearly a year ago, most of the tangible initiatives of that strategy will be unveiled over the next year. Brands such as Hershey, Reese's, Kit Kat and Jolly Rancher will get from 30% to 100% more in ad spending, and all but Hershey's Kisses-which is already deemed effective-will be on air with revamped creative, Mr. Willard said.

currently down

For the first six months of this year, Hershey spent $94 million in measured media, according to Taylor Nelson Sofres' CMR.

Hershey's ad spending is actually down slightly for the calendar year to date, and was down as much as 24% over the last quarter, according to Banc of America Securities research. Mr. Willard acknowledged the company's increased marketing has focused more on merchandising than on advertising, but said it plans to spend against improved ad copy going forward.

Coming soon is a new effort for the Hershey's bar and miniatures lines, the first under Omnicom Group's DDB Worldwide, New York. Hershey realigned Hershey's and Reese's FastBreak recently between roster shops DDB and WPP Group's Ogilvy & Mather, New York.

The new Hershey TV and print, which breaks next month, features people humorously describing how they associate Hershey with happiness. "We felt like we were hearing more convincing descriptions [about our products] in focus groups than what we were telling consumers in advertising," Mr. Willard said.

Ogilvy's new work for Reese's FastBreak is also set to break, and new copy is in development for other brands, among them Kit Kat (handled by Ogilvy), Jolly Rancher and Bites (both from DDB). While Hershey said last year it would cut by half the total number of brands it advertises, smaller businesses such as Almond Joy and Payday are also being assessed and advertising will be considered, Mr. Willard said.

New products include Hershey's To Go, Pretzel Bites, limited edition Mint Hershey's Kisses and Ice Breakers Unleashed, the first tablet gum for the brand. Advertising for Unleashed, from North Castle Partners, Stamford, Conn., breaks early next year.

Part of Hershey's new strategy is also to target more effectively. To that end, copy and media buys for brands such as Jolly Rancher, Reese's Pieces and Bubble Yum will be shifted to aim directly at kids for the first time. A current partnership with Viacom's Nickelodeon will be stepped up, as will its Nascar partnership. And Hershey has also forged new ties to Viacom's MTV and Walt Disney Co.-owned ESPN's X-Games.

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