Hershey's Cookies

New Hershey's Cookies, York Peppermint Pattie variety deliver convenience and indulgence in portion-controlled packs.

By Hollis Ashman and Jacqueline Beckley, Consumer Understanding Editors

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Chocolate, that elixir of life, was introduced to the Spanish by Christopher Columbus in 1502. This was kept a secret for 100 years, eventually moving to the rich and wealthy throughout the rest of Europe. Chocolate was first manufactured in the U.S. in 1765 by John Hanau and James Baker. The Swiss began making chocolate in the mid 1800s, with Henry Nestle and Daniel Peter using sweetened condensed milk to create their chocolate.

Further improving chocolate by removing the acidity and bitterness, Van Houten’s “dutching” process squeezed out cocoa butter from the beans. Randolphe Lindt created his chocolate by adding the cocoa butter back; this allowed the chocolate to set up into a bar that “snaps” when broken as well as melting on the tongue.

Hershey, one of the major American chocolate brands, continues to search for ways to make the chocolate experience ubiquitous. Hence the melding of two categories, cookies and candy, to create Hershey’s Cookies.

This candy/cookie product, which has been available nationally since December 2004, is an on-the-go treat in a size you can either consider portion-controlled or ideal for light sharing: four cookies in a 2-oz. bag. We consumer-tested the York (Peppermint Pattie) version.

Understanding the marketplace

Cookie wafers is the fastest growing category for chocolate candy except for seasonal (Halloween and Valentine’s Day) and was reported at more than $200 million in sales in 2002. In October 2004, Information Resources Inc. reported sales of chocolate candy increased 0.8 percent to $13.5 billion. The majority of the growth occurred in convenience stores (5.5 percent) and drug stores (4.4 percent) with supermarket growth (3 percent) following behind.

Per capita consumption of chocolate changes on a year-to-year basis, but has been pretty flat for the past several years. Per capita retail spending on chocolate was up slightly in 2002, to $46.51, an upturn of 0.3 percent over 2001.

Packaged cookies are consumed at many of the same parts of the day as chocolate. Packaged chocolate cookies is a much smaller though significant market relative to chocolate candy ($1.03 billion in 2002) with the top selling brands being Nabisco’s Chips Ahoy and Keebler’s Chips Deluxe.

Hershey is facing a stagnant chocolate candy market, while snacks are growing at a greater rate. The company also sees consumers eating more snacks and products on the go. So Hershey is leveraging its strong chocolate brands to move into the candy/cookie space, which has the highest growth rate of chocolate candy (except seasonal) – one that both Nestle and Mars mapped out years ago with Kit Kat and Twix bars. Nestle just dug deeper a year ago with the introduction of its Toll House Candy Bar. Hershey’s been here before, too, with its Kit Kat bars and more recently with ReeseSticks. (Nestle owns the Kit Kat brand worldwide and Hershey licenses it for the U.S.)

Hershey has produced a product that fits with the growth in channels, while also providing something akin to a dessert for consumers looking for a satisfying chocolate dessert snack. The placement of this product in the candy aisle should also enhance profit margins.

Insights

Hershey is looking to move its popular chocolate brands (York Peppermint Patties, Reese’s, Hershey’s with Almonds and Almond Joy) into a new product space. This brings them into direct competition with other chocolate-covered cookies, but with a set of brands that shouts real chocolate.

Hershey is a well-known brand and has earned trust through providing consistently good-tasting, high-quality, often distinctive chocolate for more than 100 years. Made from a secret blend of high-quality cocoa beans and milk with a flavor profile that skews “American,” Hershey brand chocolate has been making people happy for years.

Our Crave It! process integrates 30 conjoint studies to generate a database that can be used to understand the experience of foods (from product, situation, emotions, and brands/ benefits) in the marketplace. This process tells us chocolate is a mood food. It can be about the taste experience and/or a treat (indulging). Both men and women report very similar chocolate behaviors. Key attributes are melt-in-your-mouth, flavor and texture. Chocolate is consumed most often after lunch, mid-afternoon and late evening.

Cookies are about the brand, secret recipes and extras in the cookie if you want them; moist, chewy, melt-in-your-mouth and fresh out of the oven. They are as much about making them with your mom or grandmother as about eating them. The key attributes are taste, texture and aroma. They are a snack that can take us back to a memory of being a child. Just like chocolate, cookies tend to be consumed after lunch, mid-afternoon or late evening.

Key trends are convenience and indulgence.

Convenience: Manufacturers are responding to consumers’ hectic lifestyles by creating packaging that assists convenience. Consumers who are looking for a one-serving impulse buy can get their more chocolate/cookie fix without the need to buy an entire 1-lb. bag or package.

Also, good quality cookies are not as available as good quality chocolate. By coating the cookie with chocolate, Hershey enables the product to be stocked in more impulse-oriented locations. But is it chocolate or a cookie?

Indulgence: Pleasure is important in this busy world. We have seen many products focused on healthy aspects, but the pleasure of chocolate is still a strong trend. Cookies are not considered as indulgent as chocolate.

The experience

Hershey Cookies are available in four varieties: Hershey’s with Almonds, Almond Joy, Reese’s and York Peppermint Pattie. They come in 2 oz packages with four cookies for 99 cents. The whole idea of chocolate cookies from a “good” chocolate brand can get consumers excited.

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