Sector News

Hershey names Michele Buck CEO

December 22, 2016
Food & Drink

Hershey Co. said it was elevating its chief operating officer, Michele Buck, to the chief executive job, months after rejecting a bid for the chocolate company by Mondelez International Inc.

The change in leadership comes as investors press Hershey for more insight into its long-term strategy as an independent company that needs to win over consumers increasingly moving toward more health-focused snacks.

She will start her new job in March, replacing Chief Executive J.P. Bilbrey, 60, who said in October that he would step down after five years in the position. Mr. Bilbrey will remain nonexecutive chairman.

The changeover is earlier than Hershey initially anticipated a successor, but she was widely expected by industry analysts to be offered the position given her roughly three decades of experience in branding and marketing at Frito Lay, Kraft, Nabisco and Hershey.

Ms. Buck, 55, joined the company in 2005 from Kraft Foods Inc., which in 2012 became known as Mondelez. Over the summer, Hershey promoted her to chief operating officer, adding to her duties as head of its North America business.

The maker of Reese’s peanut-butter cups, chocolate Kisses and other brands credits Ms. Buck with playing a key role in the chocolatier’s strategic shift into the broader snacking categories—from snack mixes to dried meat bars.

Hershey, which has billed new offerings as an effort to keep up with Americans’ changing tastes, has bought Krave beef jerky, created a line of protein bars and squeeze pouches called SoFit, and come out with snack mixes of chocolate, pretzels and nuts, in an effort to broaden its reach.

“We really view our competitive landscape as being that whole snacking world,” Ms. Buck said on a recent conference call with analysts. “We know that snacking is growing faster than the total food market. And within that, we’re seeing a lot of growth in indulgent snacking, and we think it’s a real opportunity for us.”

Some see the moves into meat snacks and protein bars as too far of a stretch for the iconic candy maker, which posted $7.4 billion in annual revenue last year, roughly 90% of which comes from its North America candy sales.

Like many iconic food brands, Hershey has contended with upscale competitors and increased consumer focus on healthier ingredients.

Hershey has tried to make its namesake candy bar and chocolate Kisses more appealing to Americans by simplifying the ingredients—using cane sugar instead of high fructose corn syrup, for instance.

Ms. Buck said new products under its iconic brands like its Big Kat, Reese’s Pieces Cup—a larger version of its peanut butter cups with Reese’s Pieces inside—and its snack mixes, were crucial to attracting consumers and getting ideal shelf space in stores.

She expects the newest candy, a Hershey bar with cookie bits in it that will compete with a Mondelez Milka chocolate bar with Oreos in it, to be a big contributor to sales growth next year.

And yet, balancing the cost of new products and strong advertising with profit margins can be a tough act.

Mr. Bilbrey is the third CEO to step down at Hershey in the past decade.

David J. West stepped down in 2011, in part over a disagreement with Hershey’s controlling shareholder, the Hershey Trust Co., over whether to bid for Cadbury PLC. His predecessor, Richard Lenny, stepped down in 2007 after multiple clashes with the trust’s board.

People familiar with Mr. Bilbrey’s talks with the trust said that his trying to negotiate a deal with Mondelez could have raised tensions between Mr. Bilbrey and members of the trust’s board who opposed a sale.

The trust’s board will be another complexity Ms. Buck will have to navigate in her new role.

By Josh Beckerman

Source: Wall Street Journal

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