Hershey's Takes on Nutella, Jif, in Spreads

NEW YORK (TheStreet) -- Hershey's  (HSY), owner of iconic brands like Reese's, Jolly Rancher, Ice Breakers, and Hershey's Kisses, announced its entry into the spreads category Wednesday. The launch continues Hershey's growth into additional categories. With previous success in categories like baking supplies and beverage toppings, Hershey's should be able to grow market share rather quickly in the spreads category.

Hershey's entry into the spreads category puts pressure on two brands with success in the market. Nutella, made by the Italian company Ferrero and Jif, made by J.M. Smuckers   (SJM) have seen sales of their hazelnut spreads dominate the market. Hershey's initial launch will bring three different flavors with a retail price of $3.79: chocolate, chocolate with almond and chocolate with hazelnut. Hershey's is building on its dominance of the chocolate flavor and, unlike Nutella and Jif, won't be reliant on hazelnut to see sales in the spreads category. By offering three different flavors, Hershey's could see its market share increase rather quickly.
 
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Another recent move by Hershey's involves the company partnering with 3D Systems  (DDD) to explore options to create edible foods using 3-D printers. The multi-year deal partners the leading American chocolate company with one of the top names in the hot 3-D printing market.

Aside from these two recent announcements from Hershey, the company continues its international expansion and ultimate five-year plan. In December, Hershey's acquired a majority stake in Golden Monkey Food Company, a deal which should increase the company's sales in China. Golden Monkey said it expected annual sales of $225 million for 2013. Hershey's reportedly paid $584 million for its stake.

International sales continue to be a huge opportunity for Hershey's. In 2012, only 10% of the company's sales came from international markets. The company expects that number to hit 25% in 2017. More growth can come from entries into new countries, as Hershey's was only in 70 when it set its goals for 2017.

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Hershey's five-year goals, set in 2012, called for earnings per share growth of 8% to 10% annually. The company also wanted to see sales hit $10 billion by 2017. In 2011, when the goal was set, annual sales were $6.1 billion. Despite shares trading around 52-week highs, the plan seems right on track and should continue to push Hershey's shares to new highs through international growth and product innovation.

At the time of publication the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Author holds no position in any companies mentioned. 

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