Question

country: netherlands

Conduct research on the confectionary industry in your country.  Which companies represent the most significant competitors for Hershey in this country?  Do local companies or other foreign-based MNCs pose the greatest threat?  Evaluate Hershey’s strengths and weaknesses compared to these competitors.

Answer 1

Confectionary industry in Netherlands:

The confectionary industry in Netherlands can be discussed under the following heads:

Chocolate confectionary:

It is master foods veghel which leads the chocolate confectionary in Netherlands with share of 19% in the market. The company remains the leader but started to face a fall in its overall value as countlines are declining popularity in Netherlands. In 2016, master foods introduced mar bites but it did not help in any manner and further reduced the share.

Prospects:

The outlook for chocolate confectionery is expected to be good in the forecast period. The category is set to record good volume and value CAGR at 1%.

Gum confectionery in Netherlands:

Gum continues to suffer a decline both in terms of volume and value. This can be due to customer’s preferences for mints. This is because it is considered to be impolite in public and similarly disposing off the gum after chewing is another issue. Mondelez Nederland is the leader in the gum confectionery because of its presence in both chewing and bubble gum.

Prospects:

The outlook for gum is in bleak and the value CAGR records a decline of 2%. This can be because of customer’s preferences for mint over gum.

Sugar confectionery in Netherlands:

Sugar confectionery seems to have a positive growth. This is because many consumers were interested in healthier snacking. The sales of sugarised confectionery declined whereas it was good for non sugarised confectionery. Perfetti van melle group is the leader in industry. The company is well known for its products like mentos, fruitella, chupa chips etc.

Prospects:

Sugar industry is expected to record a decline in its value whereas volume can increase. This is because of customer’s feeling it is unhealthy to consume sugar confectionery and they prefer sugar free alternatives.

Competitors for Hershey in Netherlands:

It is Albert heijn and jumbo who are the competitors for Hershey in Netherlands. This is because they have a market share of 54% when compared to Hershey’s market share.

The local companies can be a great threat to Hershey. This is because they account for more market share. Apart from this there are also other local brands that have a strong presence in Netherlands.

Strengths and weaknesses of Hershey:

Strengths:

The strengths of Hershey is its sales, distribution and diversification. Its main customers are wholesale distributors, grocery stores, department stores, clubs, supermarkets etc. there is a vast distribution network which account for more than 20% of Hershey’s sales. It manufactures diverse range of products.

After performing well in candy market, it started to acquire more businesses and also got the right to produce Cadbury products in US. It also trades in commodities of sugar and cocoa products. It manufactures in joint venture in India, Brazil and china and also manufactured by licenses in Japan and Korea.

Hershey also has its own town called Hershey Pennsylvania. It has the chocolate factory there. It also has the community center developed for its workers. The town also has the Hershey park which consists of amusement parks, a pool etc.

Weaknesses:

The most important decision Hershey has to make is its FDI strategy. It has over dependence on its US market with small number of distributors and revenue prohibiting the company to grow internationally. Its revenue from international operations is considered to be less than 10% of total revenue. The over dependence on US market and limited distributors place the company in risk and trouble because it can lose more of its customers when there are economic downturns. McLane a major distributor for Hershey accounts for 17% of its receivables.