Packtype Reference Guide March, 2011. 2 Standard Bars$ 895$ 929+ 3.8% King Size$ 473$ 545+15.1% CPC$...

Packtype Reference Guide

March, 2011

2

Standard Bars $ 895 $ 929 + 3.8%

King Size $ 473 $ 545 +15.1%

CPC $ 598 $ 628 + 4.9%

SUBs $ 68 $ 93 +46.3%

8-Packs $ 286 $ 305 + 7.5%

6-Packs $ 198 $ 204 + 2.5%

TH Bars $ 180 $ 168 -6.5%

Big Box $ 84 $ 89 + 4.6%

TOTAL $2782 $2961 +6.4%

Focus Pack Performance Projections

PacktypePacktype 20102010 2011*2011* % Δ% Δ

Focus Packtypes are over 60% of THC volume and projected to grow +6.4% YOY in 2011

* March 2011 consensus estimate

3

Hershey’s is the Instant Consumables market share leader

IC Candy / Market ShareFDMxC 52 Week Ending 2/19/11

Source: Nielsen

IC Candy / $ ChgFDMxC 52 Week Ending 2/19/11

All Other 13.4%

Nestle 9.4%

Mars/Wrigley 37.4%

Hershey 39.8%

Hershey

Dollar Chg

$139.8M

Mars

$118.4M

Nestle

$1.7M

4

Standard Bar/ King Size

Multiple candy purchases in the same trip

– 81% of candy trips are made where both IC and TH candy is purchased

Once a candy buyer decides to make a purchase, 85% will make the purchase and not consider any alternative items such as salty snacks

Brands matter - Reasons for impulse purchases:

– Noticed packaging of favorite brand and immediately developed a craving for it

Source: Nielsen HomeScan Panel 1/09 ; SmartRevenue Aisle study 2007 ; 2008 C-Store Close-up (Meyers Research)

Quick FactsQuick Facts UsageUsage Merch StrategyMerch Strategy

Key InsightsKey Insights

Purchase decision process

– Usage occasion

• Reward

• Comfort

• Escape from boredom

– Choose brand

• From personal menu

• Brand fits need state

• Variety critical

– Pack-type pre-determined

Primary Consumer: 91% of purchases are for themselves

86% of bars purchased are consumed within 30 minutes

When consumers can’t find what they want, 25% will walk away from the purchase

Display in high traffic locations

– 75% of purchase decisions are in-store

– Create displays with Brands consumers are familiar with

5

Hershey’s is the Take Home market share leader

TH Candy / Market ShareFDMx 52 Week Ending 2/19/11

Source: Nielsen

TH Candy / $ ChgFDMx 52 Week Ending 2/19/11

All Other 26.5%

Stover 4.1%

Lindt/Ghir 4.9%

Nestle 6.1%

Private Label 6.2%Mars/Wrigley 21.8%

Hershey 30.4%

Hershey

Dollar Chg

$45.1M

Mars

$33.4M

Private Label

$19.9M

6

Chocolate Packaged Candy


– 70% of large bag consumers bought something else – other CPC, Standard Bars & Snack Size

– 60% of small bag consumers bought something else – other CPC, Standard Bars & 8pks

– 31% of CPC purchasers buy more than one bag per shopping trip across Multiple Sizes

Brands are the key purchase drivers

– 50% of shoppers will not substitute brands when they can’t find their favorite

Source: Lieberman Take Home A&U September 2008 ; Candy Dish Omnibus2008; Nielsen Total US FDMx -52 week ending 4/17/10

Quick FactsQuick Facts UsageUsage


Candy Dish

– 60% of consumers own a candy dish

– Prefer wrapped

– Candy Dish users eat more than non candy dish users

Self Indulgence/Reward

Portion Control

HSY Share: 41.2%%

Sales Gain: +4.0%

Primary Buyer: Female 25-54

Average bag lasts 7 days


– 72% of brand decisions are in-store

Rotate features between 10-12oz and 17-20oz Bags

Create Candy Dish Displays around core CPC Brands and also Trade Up CPC

Merch StrategyMerch Strategy

7

Hand To Mouth SUBs

HTM is differentiated from Wrapped Candy – Hold in your hand– Small pieces – Portion size control – Focused on “Fun Nibbling”



At Home and On the Go Snacking

Core consumer is adult 18-54 yrs looking for iconic brands in a snackable form

HTM products fulfill the following functional needs:

– Bite-sized– Fun and convenient to eat– Easy to share– Resealable package

Hand-to-Mouth (HTM) represents over 16% of total chocolate sales

The H2M segment grew $19.5M or 9.5% vs. PY

PIECES drove 67% of H2M segment growth

Capitalize on growing H2M segment by placing Mods and Shippers in high traffic locations

Source: Lieberman Take Home A&U September 2008 ; Candy Dish Omnibus2008 FDMx IRI ending 4/19/09


8

Trade Up CPC

HERSHEY’S BLISS Trial and Repeat continues to outperform new product norms

– Brand Awareness is 70% for Targeted users and is growing


– Consumers purchase Trade Up CPC and other candy items in the same trip

Brands are the key purchase drivers

– 50% of shoppers will not substitute brands when they can’t find their favorite

Source: Lieberman Take Home A&U September 2008 ; Candy Dish Omnibus2008 FDMx IRI ending 4/19/09



Small Personal Reward

Candy Dish

– 60% of consumers own a candy dish

– Prefer wrapped

– Candy Dish users eat more than non candy dish users

Sharing

Portion Control

Trade-Up Everyday CPC is a $230M category

– Bliss represents a 12.1% share of TU CPC

Trade-Up brands account for 18% of Packaged Candy

Primary Buyer: Female 25-49

Trade Up Packaged candy grew at double digit rates

Average bag lasts 8 days



Create Candy Dish Displays around core CPC Brands to include Trade Up CPC


9

8-Packs

Variety and value are the primary drivers motivating 8-Pack purchasers to buy multiple brands during their shopping trip

Value

– 92% of consumers consider 8-Packs a good/very good value.

Source: Lieberman Take Home A&U September 2008 ; Spectra Behavior Scope 2007; Nielsen Total US FDMx -52 week ending 4/17/10



On the Go Activities

Family Snacking and lunch treats

Portion Control

– Ability to provide variety and brand favorites for everyone

HSY Share: 49.5%

Share Gain: 0.1%

Primary Buyer: Moms & heads of households with kids

Consumers purchase multiple 8-Pack brands during their shopping trip

Hershey’s 8-Pack brands command a 50% share of all 8-Pack in-store merchandising

Display 8-Packs in multiple, high-traffic locations


10

6-Packs


– 68% of consumers who purchased a 6-Pack, purchase another packtype during the same shopping trip

Value

– 89% of consumers consider 6-Packs a good/very good value based on a per bar comparison to Standard Bars (everyday and promoted prices)




S’MORES and Family Activities

Family Snacking and lunch treats

Portion Control

– Ability to share with family members and friends

– Individually wrapped servings

HSY Share: 82.5%

Share Gain: +3.1%

Sales Gain: +5.9%

Primary Buyer: Head of Household with older kids

Consumers keep on average two 6-Packs in household inventory

Grocery & Mass account for 82% of 6-Pack retail volume

49% of 6-Pack volume is sold with quality merchandising support

Display Hershey’s 6-Packs May – Sept to support S’MORES Season and family activities


11

XL/Giant Bars


– 63% of consumers who purchased an XL bar, purchase another packtype during the same shopping trip

– Standard Bar, Snack Size, and Peg Bag were the most commonly purchased packtypes

Value

– 91% of consumers consider XL Bars a good/very good value




Movies and Snacking

Personal Snacking

Portion Control

– Ability to share with family members

– Resealable package

HSY Share: 87.5%

Consumers age 45 & older account for 69% of XL volume

Consumers keep on average two XL bars in household inventory



Display in secondary locations to increase consumer awareness and create impulse purchases


12

Big Box

93% of consumers who purchased a Big Box, purchase another packtype during the same shopping trip - Standard Bar, 8-Pack and Peg are the most commonly purchased packtypes

Product uniqueness and variety are primary drivers motivating Big Box purchases

Value

– 88% of consumers consider Big Boxes a good/very good value

Source: Lieberman Take Home A&U September 2008 ; IRI FDMx 52 wk ending 4/19/09



Movies and Snacking

Watching movies/going out to movies

Portable and pourable on-the-go snacking

Portion Control

Top 4 selling Big Box brands:– Good & Plenty– Milk Duds– Whoppers– Reese’s Pieces

36% of consumers purchase Big Boxes when not on sale

– Variety– Unique candy type

Cross-Merchandise in secondary locations:

– Movie rentals– Pharmacy


– 75% of purchase decisions are in-store


13

% Vol Inc. by Merchandising Condition

FDMx - 52 Wk ending 2/19/11

Source: Nielsen

Merchandising generates significant lift for both IC and TH packtypes

King Size

%LiftF&D% Lift

AnyDisplay

235.0%

163.8%

Standard Loose

250.1%

170.6%

CPC

273.7%

141.8%

6 packs

406.2%

235.4%

8 packs

246.7%

142.3%

TH Bars

333.3%353.9%

14

Hershey

Dol -Any Disp

$84.7M

Mars/Wrigley

$65.2M

Nestle

$15.3M

Pearson

$2.4M

Tootsie Roll

$2.0M

Topps

$1.5M

Perfetti

$0.6M

Ferrero

$0.6M

Hershey’s drives more Instant Consumable display sales than competition

IC / Dollar Sales, Any Disp. FDMx - 52 Wk ending 2/19/11

Source: Nielsen

15

HERSHEY’S IC mods trigger impulse purchase and are easy to shop and refill

2-sided unit provides improved product presentation

Shoppable from all layers

High impact brand graphics

4-sided, shoppable merch unit

High impact brand graphics

Easy to shop and refill birdfeeder trays

16

Hershey

Dol -AnyDisp

$284.3M

Mars/Wrigley

$161.8M

Nestle

$52.7M

PrivateLabel

$47.1M

TootsieRoll

$37.8M

Stover

$29.9M

Lindt/Ghir

$24.7M

Ferrero

$17.3M

Brachs

$12.6M

Just Born

$11.5M

Hershey’s drives more Take Home display sales than competition

TH / Dollar Sales, Any Disp. FDMx - 52 Wk ending 2/19/11

Source: Nielsen

17

HERSHEY’S TH mods trigger impulse purchase and are easy to shop

2-sided unit provides improved product presentation

Shoppable from all layers

2-sided, shoppable, stackable DRC’s

New high impact side panel graphics

Easy to refill and maintain using new stackable DRC’s

18

HERSHEY’S new Std Bar/CPC mods blend the top selling packtypes in IC and TH

2-sided, shoppable, stackable DRC’s and birdfeeder trays

High impact, branded side panel graphics

Easy to shop and refill both sides

Packtype Reference Guide March, 2011. 2 Standard Bars$ 895$ 929+ 3.8% King Size$ 473$ 545+15.1% CPC$...

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