Hershey

Chocolate, beef jerky, salads: Hershey and the changing tastes of the American consumer

By Tina Irgang

Hershey announced this week that it would start selling dried meat bars, following a decline in candy revenue. It’s the latest in a line of companies to attempt a strategic pivot as Americans embrace healthier eating habits. So is Hershey going the right way about a renaissance?

Hershey bought the Krave beef jerky brand last year, but has yet to turn it into a major money maker: Snacks only account for some two percent of the company’s total sales, notes Forbes.

For a company with many different brands under its umbrella, like Hershey, it’s usually a good idea to kill off unprofitable brands rather than try to add new ones to the roster, argues the Harvard Business Review. “Some businesses have improved performance by deleting not just loss-making brands but also declining, weak and marginally profitable brands. They’ve used the resources they’ve freed to make their remaining brands better and more attractive to customers,” the article goes on to say.

So Hershey may be better off focusing on the core products consumers like, and finding a way to make them more appealing.

That’s the way Hershey’s main competitor, Mars Inc., is going, reports The Wall Street Journal. While Mars is exploring chocolate options that are smaller in size or higher quality, a spokesman pointedly notes that “we’re not diversifying outside chocolate like some others are.”

It’s also worth considering that “The Hedgehog Concept,” detailed in Jim Collins’ business bible Good to Great, holds that great companies are the ones who know — and focus on — what they can do better than anyone else.

McDonald’s and Kraft: Do what you know, better

The risks of major food makers moving outside their comfort zone have been demonstrated by several brands in recent years, not least of them McDonald’s. “The company has tried a dizzying array of tactics to reinvigorate its business and shed its bad-food image, like new products, healthier options, lower prices, higher prices, store revamps and greater transparency, to little avail,” The New York Times reported last year.

However, the company’s fortunes are now on the mend. In the fourth quarter of 2015, McDonald’s posted its best results in years, following a decision to serve breakfast all day, according to Bloomberg. That decision satisfied “a long-standing demand from customers,” the article notes.

After trying for years to be more like Chipotle or Shake Shack, McDonald’s focused in on something it knew its loyal customers liked — breakfast — and expanded it.

Of course, tinkering with the actual recipes of consumer favorites to make them healthier is a rather more tricky business. If Hershey bars were made with less sugar or using fewer artificial ingredients, would consumers still want to buy them?

Kraft Foods recently proved that consumers can adapt to healthier tastes in their favorite junk foods, but with a caveat. Kraft revamped its iconic macaroni and cheese product in 2015 to remove artificial preservatives and dyes. However, wary of alienating fans, the company didn’t announce the recipe change until a year after the new version had already hit shelves, as reported in The New York Times.

How Hershey, Kraft, McDonald’s and other junk-food giants will fare in the long run remains to be seen. However, if you’ve ever had a salad at McDonald’s, you know that sometimes, it’s better to stick with your strengths.

Tina Irgang is the production editor for SmartCEO. Contact her at tina@smartceo.com.