How a Powerhouse Brand Portfolio Innovates like a Scrappy Startup!

Posted March 16, 2018

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A powerhouse brand portfolio innovates like a scrappy startup! Yes, sometimes, a new business opportunity is hidden in plain sight. It may be:

 

  • a new approach to the lip balm business that leverages the iconic shape of a HERSHEY’S Kiss;
  • a cross-merchandising juggernaut to take advantage of the HERSHEY’S bar’s role as the core of S’mores; or
  • the year in, year out success of Reese’s Puffs cereal that continues to out-index the broader cereal category.

The common thread running through those creative approaches to breaking through the clutter to gain shelf space and brand prominence is the family of Hershey brands that’s quietly become a staple of the food and non-food licensing business.

The company behind those brands is a marketing powerhouse, spending more than $600 million annually to support a business that has reached $7.4Billion in annual sales, and the top share in chocolate confectionary. It has a huge social media following across all major platforms.

As it prepares to celebrate its 125th anniversary next year, Hershey is the top food company on License Global’s annual list of the Top 150 Global Licensors, with power brands such as HERSHEY, HERSHEY’S Kisses, Reese’s, Jolly Rancher, Twizzlers, among others. “At its core, our licensing program is based on spurring the emotional connection consumers have with our brands and reinforcing their individual characteristics to foster their relationship with our iconic portfolio of confection brands” says Ernie Savo, Director of Global Licensing.

hershey1Take, for example, a transformation within the highly competitive but relatively stable lip balm category in a which a new shaped dispenser had taken over from the traditional cylindrical shape. Even though it already was one of the largest non-food licensing categories for Hershey, rather than try to mimic the new shape, the company got together with licensee GBG Beauty to, in the words of Savo, “reinvent the business through a very collaborative process.” The result: a unique lip balm in the patented shape of a HERSHEY’S Kiss that stood out from the crowd, offered lots of colorful and seasonal options (i.e. candy cane stripes for Christmas) and more than doubled the business.

The wrapping of the HERSHEY’S Kiss plays into another fresh effort – a direct-to-retail (DTR) license agreement with LeSportsac hershey2(debuting shortly before Valentine’s Day) that uses elements of classic Hershey packaging – a metallic silver shell on several pieces that mimics the wrapping of a HERSHEY’S Kiss, along with the signature printed blue on white ribbon; a cosmetics case representing a half-opened HERSHEY’S bar. (A wristlet in the shape of a Hershey’s Kiss was marked on LeSportsac’s website as “Sold Out” a week before Valentine’s Day.)

hershey3The non-food business is about building the brand experience through unexpected touchpoints that engage existing fans and attract new ones to the core confectionary. Hershey aims to own the s’mores category through both cross-merchandising efforts with Kraft (marshmallows) and Honey Maid (graham crackers) supplemented by a targeted collection of licensed grilling utensils from licensee Blue Rhino, which saw a license with Hershey as a way to extend its own business as a well-known supplier of propane tanks. And this past year saw an extension into accessories such as a branded S’mores caddy (lets you pack all the ingredients into a single kit) from licensee Blue Rhino Sourcing, Inc.

Of course, taste is at the heart of the Hershey story, and indeed the overwhelming majority of the company’s licensing business involves long-term strategic partnerships which bring its brands’ flavor profiles, recognition, customer loyalty and “feel-good treat” to food and beverage companies, ranging from ice cream and frozen novelties and desserts to cereal, baking products, pudding, cookies and beverages.

Tactics and strategies can vary widely. In the case of the Hershey 10+ year relationship with licensee Unilever for Breyers Ice Cream is yielding ice creams with add-ins such as HERSHEY’S Kisses, Heath toffee and Reese’s Peanut Butter Cups, “maximizing their brand strength and ours,” says Savo.

Similarly, the license for Reese’s Puffs cereal that began in 1994, has been a bright spot – sales were up 14% last year, says Savo — in a cereal market that’s been declining 2-3 percent per year, leveraging the power of the Reese’s brand with an endorsement of the “Big G” from General Mills Cereal business on the box to lend creditable to Reese’s Puffs as a great tasting and wholesome cereal brand from a trusted cereal company.

But other goals came into play in the pudding category, where licensee Kraft was looking for a premium trade-up from its widely distributed Jell-o brand. The Jell-o brand appears nowhere on the Hershey packaging, given Kraft’s desire to grow the overall category buy using the power of the Hershey name, its rich flavor profile, and consumer recognition. For Hershey, it moves the brand into a new category with a licensee that has existing channel relationships and market strength of its own.

Whether in flavor and ingredients-based licenses, or non-food deals leveraging brands such as HERSHEY’S Kisses, Jolly Rancher, Reese’s or any other, the Hershey Global Licensing business is a story of a power house brand portfolio that, even as it passes the milestone of its 125th anniversary in 2019, is innovating like a scrappy startup.