Business

Mr. Goodbar And “8th Wonder Of Chocolate World” Propel Hershey Sales

Citigroup added Hershey to its top investment picks on Monday, saying its second quarter sale report Thursday should show “tremendous growth” in Mr. Goodbar, Heath, and Rolo, and it might have the next big thing with Brookside chocolates.

Citigroup rates shares of Hershey sinfully sweet.

The bank added the chocolate maker to a list of top investment picks on Monday, citing soaring sales in the second quarter across “its entire U.S. chocolate portfolio,” as well as in emerging markets.

Not only are staples like Reese’s Peanut Butter Cups and Hershey’s Milk Chocolate growing, but Rolo, Heath, and Mr. Goodbar saw sales gains in the teens, as the company amps up its advertising budget this year, according to Citigroup, which cited Nielsen data.

A major reason to expect great sales out of Hershey — which raked in $6.64 billion in revenue and $661 million in profit last year — is Brookside, a “blockbuster” new product that Citigroup refers to as “the 8th wonder of the chocolate world.” Analysts David Driscoll and Cornell Burnette project Brookside ultimately becoming a $500 million brand for the company, on par with Kit Kat bars and Hershey Kisses, and about one-third the size of Reese’s.

That’s because Brookside’s mix of fruit berries with chocolate represent a game-changing “eighth” flavor outside of the major seven, which are chocolate, peanut butter, peanuts, caramel, nougat, mint, and coconut, the analysts say. New brands are rare within the candy industry and tend to veer toward plays on existing products, such as Kit Kat Minis or Rolo Minis or Reese’s Minis (perhaps you notice a trend here).

Brookside, a Canadian company that Hershey acquired for an undisclosed sum in December 2011, has patents around the process for making real fruit juice pieces that retain some antioxidants, giving consumers the perception the candy is somewhat healthier for them, especially with flavors such as acai, pomegranate, and goji. Plus, the name Hershey isn’t on the packaging, giving it a more independent feel.

Wholesale revenue for Brookside reached $115 million in Canada and the U.S. last year, though the big U.S. rollout of the chocolates just started in February. Citigroup estimates Hershey will spend $40 million in advertising Brookside this year. The analysts project Hershey’s revenue to increase 9.5%, or by about $134 million, in the second quarter.

Citigroup says these candies are “the 8th wonder of the chocolate world.”

Via brooksidechocolate.com

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Sapna Maheshwari is a business reporter for BuzzFeed News and is based in New York. Maheshwari reports on retail and e-commerce.
Contact this reporter at sapna.maheshwari@buzzfeed.com
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