Chocolate

Volume 5 Letter 1

Some claim it’s to die for while others claim it’s to live for. Long known as a medical drug, love potion, nourishing food and war ration, chocolate has won the hearts of many over the last century. In 1894 Milton Hershey decided to produce sweet chocolate as a coating for his caramels and in 1900 began producing milk chocolate bars. Through mass production Hershey lowered the cost of milk chocolate and thus made this once luxury item for the rich affordable to all. In doing so, he built one of the major business empires in the USA.

After his death in 1945 the Hershey Company went into a long retreat. Hershey had never advertised and fearing to break a tradition the company continued not to. It took until 1973 when Mars surpassed Hershey to become the number one chocolate manufacturer in the US did the Hershey company finally wake up to the need for marketing. Candy bars are impulse purchases and for an impulse purchase “he who controls the most shelf space wins’.

In an effort to control more shelf space Hershey started to advertise their products and developed new product offerings. One of them, called Reese’s Pieces was launched in 1978 but initial sales were sluggish. The product was good but it needed something to get it going.

The new chief of marketing was approached by Universal Studios – they needed a candy to lure a space monster from his space capsule – a role that the Mar’s company turned down for its M&M’s. The marketing manager for Hershey met with the movie’s director and signed a deal to promote Reese’s pieces.

Armed with only a few photos of an ugly space monster to show his colleagues, the marketing manager knew his career was on the line. Hershey launched its largest public relations campaign for a single brand and stocked Reese’s Pieces in over 600 theatres scheduled to premier the movie.

On opening night of the movie, Hershey execs and workers crowded into the local theatre. There, they watched a young boy place Reese’s Pieces along the ramp leading to the alien space craft thus drawing the monster out from the space ship. The movie ET directed by Steven Spielberg would go on to set box office records and carry along with it the fortunes of Reese’s Pieces. Sales of Reese’s Pieces tripled within two weeks of the films release and would become the biggest marketing coup in Hershey’s history.

What can we learn from Hershey?

 

    1. Reputations must be built on not rested on: It took 20 years but Mars surpassed Hershey with superior marketing.

 

    1. Know the drivers of your market: In the candy market the key driver is shelf space – what is the key driver in your industry?

 

    1. Be bold: The marketing director of Hershey needed to do something to get the public’s attention for Reese’s Pieces (getting lucky and choosing the movie ET also helped).

 

    1. Align all pieces of your strategy: Hershey plants geared up to produce enough Reese’s Pieces, the candy bar was distributed in the Theatres for the first time, promo campaigns were developed around ET before the movie release etc.

 

The chocolate wars between Mars, Hershey, Nestle, Lindt and others continues as consumers devour over twenty billion dollars a year of chocolate. Is it a cure for depression, a love potion, war ration or diet supplement? Why choose? – Just eat some chocolate!

Further reading – The Emperors of Chocolate : Inside the Secret World of Hershey and Mars by Joël glenn brenner Random House 1999

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