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Challenges at the checkstand hurting Hershey

BY Michael Johnsen

HERSHEY, Pa. — The evolution of how Americans shop the local grocery store is negatively impacting companies like Hershey Co., which rely on a steady stream of impulse purchasing to thrive. The increased prevalence of self-checkout aisles and curbside-pickup shopping is cutting into those impulse purchase opportunities at the checkstand, while higher-income households have lost their sweet tooth in favor of healthier snacking alternatives. The influx of both salty and savory snacking options and contemporary niche manufacturers have cluttered the landscape for Hershey Co. The chocolatier told analysts last week that net sales and operating profit were "below expectations" across its non-seasonal sector as a result. 
 
"Throughout the year, retail store traffic and consumer trips were irregular. Additionally, increased levels of distribution and in-store activity of items such as salty, bakery and meat snacks, by both mainstream and newer contemporary niche manufacturers, were prevalent throughout the year and drove broader snacking category growth in 2014. This adversely impacted purchases of non-seasonal candy products resulting in net sales and operating profit that were below our expectations," explained John Bilbrey, president and CEO, The Hershey Company.
 
"In 2014 we believe lower retail store traffic, changes in consumer spending patterns as a result of the SNAP program and a more competitive snacking environment [are] contributing factors that impacted how consumers participated in the snack segment," Bilbrey told analysts. "This resulted in fourth quarter and full year sales and earnings that were below our expectations," he said. "Specifically, growth in snacking alternatives and an evolving retail landscape are impacting what consumers buy and where and how they make purchases. Higher income consumers continue to ask for simple ingredients, health and wellness, and millennials view brands and brand attributes beyond traditional transparency to include social responsibility. They are also interacting with media differently."
 
“Impulse, in an indulgent business, is really important," Hershey senior director of retail evolution Frank Jimenez told The Washington Post for a report published last week.  "But shopping is changing, and impulse is under threat,” he said. “What happens if and when the checkout goes away?”
 
The report outlined some ideas Hershey is testing that would re-establish that impulse opportunity at the point of sale, such as kiosks or menu boards for curbside grocery trips, or placing a vending machine with Hershey products in unconventional places like at the as pump. 
 
Hershey is also looking to add to its recent product additions Brookside Crunchy Clusters and Reese's Spreads with Kit Kat White Minis Hershey’s Caramels, Ice Breakers Cool Blasts Chews, Reese’s Spreads Snacksters Graham Dippers and some other "yet to be announced" new products.
 
Hershey's fourth quarter net sales of $2 billion increased 2.7% versus last year, generating adjusted earnings per share diluted of $1.04, an increase of 20.9%.
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Doritos brand names winner of Super Bowl XLIX ad contest

BY Ryan Chavis

PLANO, Texas — Scott Zabielski of Los Angeles was announced as the grand prize winner for the 2015 "Crash the Super Bowl" contest from Doritos brand. Zabielski crafted the best homemade Doritos ad, garnering the highest number of fan votes on Doritos.com. In addition to bragging rights, Zabielski will receive $1 million and a "dream job" at Universal Studios in Hollywood. 
 
'"Middle Seat' is creative, bold and original, representing everything the Doritos brand and our 'Crash the Super Bowl' contest is about," said Ram Krishnan, SVP and CMO, Frito-Lay North America. "Rising to the top among nearly 4,900 competitors from all over the world is no easy feat. If the success of our past winners is any indication, Scott's career is about to take off in the most amazing way, and we can't wait to see what happens next."
 
Graham Talbot —who created "When Pigs Fly" — was named runner-up. Talbot will receive $50,000. Both ads aired globally during Sunday's Super Bowl XLIX broadcast.
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ThinkThin fuels growth with new ‘on-trend’ product

BY Ryan Chavis

LOS ANGELES — ThinkThin will expand beyond its selection of bars with its new thinkThin Protein and Fiber Hot Oatmeal, marking its first new food category launch. The brand said it hopes to meet a rising demand for protein products and is first in the hot cereal category to offer a combo of both protein and high fiber with 200 calories or less. 
 
"ThinkThin Protein and Fiber Hot Oatmeal is an exciting and innovative addition to our product portfolio and demonstrates thinkThin's commitment to deliver food that is as nutritious as it is delicious," said Michele Kessler, CEO of thinkThin. "As a leader in the protein bar category, we have a solid understanding of the important role protein and fiber play in providing the perfect balance of energy and nutrition. We are excited to continue to fuel thinkThin's growth with the launch of thinkThin Protein and Fiber Hot Oatmeal and break into additional on-trend categories."
 
The new hot oatmeal product is available in a multipack box of six packets or a single-serve bowl. Each serving of thinkThin Protein and Fiber Hot Oatmeal contains 10 g of protein and 5 g of fiber. The product is available in four varieties — Farmer's Market Berry Crumble; Madagascar Vanilla, Almonds, Pecans; Original Sprouted Grains (box only) and Honey Peanut Butter (bowl only).
 
ThinkThin Protein and Fiber Hot Oatmeal is available online at at select retailers and grocery stores. Nationwide availability will begin in March.
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