Hershey Co, the largest chocolate maker in North America, will cut about 2,700 jobs from its global work force because of declining overseas sales, especially in China where its 2013 purchase of Shanghai Golden Monkey (SGM) has turned out to be more of a problem than a business builder. The company said on Tuesday [28 February 2017] that the implementation of its “Margin for Growth” program will reduce its global workforce of about 18,000 by approximately 15 percent, primarily in its hourly headcount outside of the US. Hershey didn’t specify where the job cuts would occur…Full Article: ECNS.cn Mar 2017

Key Points

  • According to an Analyst at J.P. Morgan, a large share of Hershey’s job cuts will occur within its Shanghai Golden Monkey (SGM) division.
  • From October to December 2016, Hershey’s North American sales (85% of total sales) increased by 3.2%, while sales in China decreased by -16.6%.

ChinaAg Comments

  • In 2015, sales of Shanghai Golden Monkey in China stalled and profitability floundered. During the same year, Hershey cut 300 jobs due to poor sales in China.
  • In early 2015, the President of Hershey International (US chocolate company) predicted Chinese chocolate sales to increase from 2014’s US$2.7 billion to US$4.3 billion by 2019.
  • In November 2014, Hershey management expected its Chinese sales to reach US$500 million by 2015 thanks in part to Shanghai Golden Monkey’s distribution system.
  • In September 2014, Hershey completed its 80% acquisition of Shanghai Golden Monkey. In December 2013, The Hershey Company announced it wanted to purchase an 80% stake in Shanghai Golden Monkey (SGM). At the time, SGM had five confectionery factories in China.
  • In May 2013, Hershey announced that launched a new chocolate product in China. The product, called “Lancaster”, is a “Nai Bei” styled candy made from high-quality imported milk (three flavors total).
  • In 2011, America’s Mars (via its Dove brand chocolate) had a 40% market share in mainland China. Following Mars was Nestle with an 11% share and Italy’s Ferrero Rocher with 9% share. In the rear of the pack were Cadbury and Hershey’s.
  • In 1995, The Hershey Company (NYSE:HSY) established a representative office in China. However, the company was not able to obtain significant market share, with Hershey products reportedly “missing” from store shelves in 2004.

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