The Hershey Company (HSY) recently announced the appointment of Universal McCann as its global media planning and buying partner to handle its media assignments.
The selection followed a rigorous eight-month review process that began earlier this year. Universal McCann will handle all of Hershey’s media assignments including all paid media (TV, print and digital) in the U.S as well as internationally.
Hershey continuously invests in advertising and marketing capabilities to build its brands globally and monitors the performance of its brands. This has resulted in volume trend improvement and consistent market share gains in the U.S. over the past many years.
In the recently reported quarter (second-quarter 2013), increased advertising investments, consumer promotions and innovation improved volume trends of core brands in the U.S. In the quarter, volume added 6.6 percentage points (pp) to revenue growth (better than the 5.3 pp in the first quarter) driven by strong volume trends and market share gains of core brands like Hershey’s, Reese’s, Kit Kat and Ice Breakers.
Advertising costs comprise a significant part of the company’s expenditures and are expected to increase 20% in 2013 to support product launches in both the U.S. and internationally.
In 2013, the company expects net sales to increase about 7% on the back of volume growth of core brands in the U.S. and the expansion of five core brands in international markets driven by increased investments in advertising and go-to-market capabilities.
The company’s brand investments give it a competitive advantage and are one of the principal reasons behind the company witnessing better volume elasticity versus peers.
Other Stocks to Consider
Hershey carries a Zacks Rank #2 (Buy). Another food/confectionery company worth considering includes Crumbs Bake Shop, Inc. (CRMB) carrying a Zacks Rank #2 (Buy). Some other food companies which are currently doing well include Pinnacle Foods Inc. (PF) and Dole Food Company Inc. (DOLE). While Pinnacle Foods carries a Zacks Rank #1 (Strong Buy), Dole Food Company carries a Zacks Rank #2 (Buy).
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