Consumers are baking at home more, but they’re also reaching for fewer mints during the coronavirus pandemic.
That’s according to The Hershey Co.’s presentation during its annual meeting of stockholders on May 12.
Michele Buck, chairman, president & CEO of Hershey, updated stockholders on the state of The Hershey Co. during that meeting as well as during its first quarter earnings call on April 23. Both meetings addressed how the company was being impacted by COVID-19.
“Our grocery and snacks businesses, in particular, saw increases in both household penetration and basket size,” Buck said during the April 23 call. “Hershey syrup, baking chips and cocoa all grew approximately 30 percent during March, and trends have remained strong as families are spending more time together at home baking.”
Buck also said the gum and mint category has been significantly impacted by social distancing.
“These categories are much more functional than emotional, and they've experienced declines of 40 percent to 50 percent over the past several weeks,” Buck said during the April 23 call.
However, Buck says e-commerce growth has accelerated meaningfully. The number of consumers purchasing groceries online has increased significantly over the past several weeks. Hershey’s research indicates 45 percent of consumers have used one or more online grocery options in the past four weeks — 23 percent of which use these services for the first time,” Buck said on April 23.
Buck also said household penetration of confections has doubled over the past few months.
“Consistent with these broader trends, our overall e-commerce growth rate has accelerated significantly, with growth over 120 percent in March versus 60 percent in January and February,” Buck said on April 23. “At one retailer, 80 percent of the full year digital sales plan was achieved in the month of March alone. In the week leading up to Easter, 43 percent of Easter sales at this retailer were purchased online. And at another retailer, we were able to make more Easter items available online and shift inventory to maximize sell-through as consumer behaviors changed mid-season.”
During the May 12 meeting, Buck outlined the ways consumer behavior has been impacted by the coronavirus.
Consumer behavior changes:
- Reduced number of trips and length of time instore; bigger basket size per trip
- Shopping priorities have changed
- Decreased discretionary income
- Shift to online shopping
Macro and retail changes:
- Shelter in place guidelines
- Retailers limiting occupancy and store hours
- Shoppers encouraged to wear masks in public
- Households experiencing heightened financial pressure
- E-commerce struggling to keep pace with demand
During the meeting she also discussed COVID-19 opportunities and challenges.
The pandemic has accelerated e-commerce, increased at-home chocolate consumption and inspired more family baking. But it also has reduced away-from-home consumption, and softened emerging markets.
“We've seen shifting consumer behavior,” Buck said during the April meeting. “More regions have enacted shelter-in-place guidelines. Retailers have limited the number of consumers in stores as well as operating hours, and the medical community is recommending individuals wear masks in public and limit grocery store trips, unless essential. A significant number of American households are not working and experiencing meaningful financial pressures. All of this has impacted traffic into stores, length of time in stores and the amount of discretionary goods people are purchasing. While many consumers have shared how our categories are helping them cope during this time and bond with their families, they've also shared how their shopping priorities have changed.”
In addition the company temporarily closed some Chocolate World Stores, a decision the company said was made out of an abundance of caution and in the best interests of guests, store associates and the communities in which these locations operate.
Hershey’s Chocolate World in Hershey, Pa.; Times Square, New York; and Las Vegas, Nevada remain closed following state guidelines. Hershey’s Chocolate World in Niagara Falls, Canada is now open with adjusted operating hours. And the company said all local requirements for employee and guest safety are being followed.
Hershey also outlined how it was handling the pandemic in various sectors of the company.
For manufacturing, they have:
- Increased safety measures and stringent operating protocols
- Issued personal protective equipment
- Offered the option to stay at home, incentives for those who choose to come to work
For sales they have:
- Provided personal protective equipment
- Flexible scheduling limiting time in-store to least amount of shoppers
- Option to stay-at-home, incentives for those who choose to remain active
For Corp and Commercial, they have:
- Allowed employees to work remotely
- Supplied equipment and technology to support remote work
Victor L. Crawford elected to the Hershey Co.’s board of directors
Also during the May stockholders meeting, Victor L. Crawford was elected to The Hershey Co.'s board of directors.
Crawford brings deep executive and leadership experience to the Hershey board. He is currently the chief executive officer, pharmaceutical segment, for Cardinal Health, Inc., a global healthcare services and products company. He has held senior management positions at several leading companies across the food and beverage, hospitality and healthcare services industries. He also has a broad range of experience in digital transformation, managing fast moving consumer goods, and logistics and supply chain management.
“Victor is a seasoned executive and he will bring great experience and perspectives to our board,” Buck said. “In addition to his proven leadership, Crawford will bring valuable CPG insights and experience in emerging markets to the board.”
In addition, Anthony J. Palmer, a Hershey board member since 2011, was appointed as the board’s lead independent director effective as of the Annual Stockholder’s Meeting on May 12. He takes over this role from Charles A. Davis, who remains on the Hershey board.
“I look forward to working closely with Tony in his new role as lead independent director,” Buck added.