The Hershey Company (NYSE: HSY) recently announced its 5-year growth plan with some very optimistic expectations. The company is targeting $10 billion in net sales by the end of 2017. As part of a new strategy the company will be focusing on five core brands: Hershey's, Reese's, Hershey's Kisses, Jolly Rancher, and Ice Breakers. CEO John Bilbrey said in a statement, "Our marketplace and financial results over the last few years validate our consumer-driven approach to core brand investment in both U.S. And key international markets." The Hershey Company is a leading manufacturer of quality chocolate and non-chocolate confectionery and chocolate-related grocery products. The company is also a leader in the gum and mint category. Hershey operates worldwide with revenue of more than $5 billion.
Tootsie Roll Industries (NYSE: TR) is one of Hershey's competitors in the candy industry. Though Tootsie Roll is smaller than Hershey, the line-up includes several popular brands in addition to its namesake candy. The company produces approximately 64 million Tootsie Rolls daily. Like Hershey is trying to do, Tootsie Roll has a narrow focus in terms of its brands. The company is a mere fraction of the size of Hershey, but its financials are solid. The namesake line is its main focus and this serves the company well.
Rocky Mountain Chocolate Factory (NASDAQ: RMCF) is a smaller international confectioner that operates throughout the U.S., Canada, and the U.A.E. The company produces approximately 300 chocolate candies and other confectionery products. Unlike Tootsie Roll, Rocky Mountain produces a large number of products. It prefers to grow its brand through retail stores and the customer experience, preparing a variety of items in full view of the customer. Perhaps in addition to focusing on a a narrower product line Hershey should also follow this lead and focus on brand perception.
Change is good and Hershey's new strategy could be a positive one for the company. Time will tell if this will play out. Tootsie Roll, though smaller, has fared well with focusing on a few core brands. Rocky Mountain, on the other hand, chooses to focus on the customer experience and retail. Retail strategies have played a great part in Apple's success. Hershey's strategy appears to be a good one, but it should not be putting all of its eggs in one basket to achieve targeted sales goals.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.