Hershey and Mondelez Look to Grow E-Commerce

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Emerging brands aren’t the only ones looking to expand their online initiatives.

Both The Hershey Company and Mondelez International announced they will be investing more in retailers’ click-and-collect programs and third party e-commerce channels during their quarterly earnings calls this week.

Speaking to investors, Hershey’s leadership reported boosted earnings for the second quarter, as the company aims to position itself as a “snacking powerhouse.” However, there are retail challenges: the shift into snacking has brought the confectionery giant into yet another highly competitive space within center store — which has proved challenging, according to CEO Michele Buck.

To counter this, Buck said Hershey’s is looking to focus on e-commerce strategies and has created a cross-functional team dedicated to generating and executing plans to grow its online strategy. The company also hopes to leverage the data generated from these e-commerce efforts to help with future innovation.

“Our absolute annual e-commerce net sales dollars are small, low single digits on a percentage basis, but it’s the fastest-growing platform of our business,” Buck said, noting the fast evolution of the space. She added that the company would be focusing on digital design to promote the company and grow the categories it works in.

Mondelez is sweet on e-commerce as well. Though the company’s earnings also beat industry expectations in Q2, the manufacturer has struggled to drive sales in the North American market of late. CEO Irene Rosenfeld, who announced her retirement on the call, said she thinks e-commerce may provide an assist and that the company’s focus on this currently “unmeasured channel” will help to complete the company’s supply chain reinvention.

“Acknowledging that there are some unmeasured channels that clearly may provide more growth is something we’ve done and clearly. Putting some investment there is part of our strategy,” CFO Brian Gladden added during the call.

The company has been looking to tighten its grasp on the online space since partnering with Chinese e-commerce company Alibaba last year. Mondelez has since said that it hopes to reach $1 billion in e-commerce business by 2020.

The companies also both emphasized a focus on snacking in addition to e-commerce.

Mondelez reported that currently 85 percent of the company’s net revenue comes from snacks. Mondelez recently tried to deepen its presence in that category’s better-for-you sector with brands like GoodThins. It’s an initiative expected to remain a top priority under its new leadership when Dirk Van de Put, CEO of the frozen food company McCain Foods, takes over from Rosenfeld in November.

Hershey has also recently announced it’s own snacking additions via the launch of Popwell, a half-popped popcorn line that it pioneered internally. Previously, Hershey turned to M&A to expand its snacking portfolio with the additions of Brookside, Krave and barkTHINS, but the integration has not always been seamless. Buck described these brands’ successes as “a mixed bag.”

“We’re really pleased with how barkTHINS is doing. And as we look at some of the rest of the pieces of the portfolio, we’ve learned a lot since we made the Brookside and KRAVE acquisitions and we’re trying to leverage that learning along the way. So we’ve had to right-size distribution on some of those brands where we think we overextended both the distribution and perhaps the portfolio a bit,” she said. “I would view this piece of the portfolio as one that we expect growth from, but I think it’s going to be a little bit lumpier and inconsistent as we leverage big learnings and expand along the way.”