Hershey boosted ad spend in Q4, as the company reported slumping net earnings and flat revenue.
The snack maker hiked advertising and related consumer marketing 5.8% in the quarter, driven by higher investment in the U.S. For the fourth quarter, net income fell 11.5% to $349 million, with consolidated net sales of $2.657 billion, and an increase of just 0.2% which missed analysts’ targets.
However, The Hershey Company’s president and CEO Michele Buck said that despite historically high cocoa prices, she believes the company’s “strong marketing plans, innovation and brand investments will drive top-line growth and meet consumers’ evolving needs.” For this year, she said the company will aim to continue to prioritize brand investment, with media spend expected to grow in line with sales, despite the challenging cost backdrop.
On Thursday (Feb. 8) Buck said she’s a “big believer in media as a key lever to drive brands” in the long term. Hershey, she said, is looking to make its dollars work harder for it. Buck added that Hershey has enhanced its media targeting for its largest brands, which will enable the brand to increase consumer reach at a higher rate for more incrementality and stronger ROIs.
Buck noted that its Reese’s brand is returning to the Super Bowl this year. For its Reese’s Big Cups Caramel, which came to Canadian retail last fall, Buck praised the Hershey’s marketing teams efforts to leverage this event to “drive consumer engagement and incremental in-store merchandising.”
Last fall, Hershey rolled out its plant-based chocolate line, Oat Made (pictured), across Canada, aiming to satisfy a growing audience with a product that it hopes will have massive appeal, but did not comment on the innovation in today’s earnings call.
In salty snacks, however, Hershey’s net sales were below expectations in the fourth quarter, driven by continued softness within the ready-to-eat popcorn category.
The company’s non-GMO and gluten-free Skinny Pop brand, experienced declines slightly outpacing the category, consistent with expectations, driven by reductions in advertising and merchandising to ensure strong customer service. Share trends “improved in December as media and in-store promotions were reactivated.”
Buck says for the first time, consumers “will see joint merchandising activations across our confection and salty snacks businesses this year, driving scale across some of our largest properties.”
Finally, Hershey noted that it expects a “slight headwind from a shorter Easter season,” which the company plans to offset with a “more robust innovation calendar, increased media reach, distribution gains and price realization.”