Hershey Navigates SNAP, GLP-1, Cocoa Shifts With Data-Enabled Operating Model
The Hershey Co. is facing its fair share of headwinds, not unlike fellow consumer goods players. Changes to SNAP benefit rules, continued interest in the GLP-1 space and ongoing volatility with cocoa are just a few of the hurdles the company has had to overcome this year.
However, according to CFO Steven Voskuil, the company has in place guardrails and strategies for each of these, underpinned by its new One Hershey operating model.
[Also: Lean more about One Hershey]
Navigating Trends and Headwinds
For SNAP and GLP-1, said Voskuil during the recent Goldman Sachs Global Staples Forum, the company has a pod dedicated to each of these areas.
"In fact, by coincidence, our pod on SNAP is actually in Texas this week, doing shopper intercepts, one-on-one interviews with SNAP consumers, understanding how they're making choices and trade-offs, the difficulty of shopping as retailers execute some of these new waivers," Voskuil said, according to statements shared from the event.
The U.S. The Department of Agriculture (USDA) imposed new rules for the SNAP program on May 7. Retailers authorized to accept SNAP benefits must now carry seven varieties of items across four categories of staple foods: protein, grains, dairy, and fruits and vegetables. This change more than doubles the requirement of available foods, emphasizes more whole foods and increases the perishable food requirements, according to the USDA.
The pod for SNAP takes a data-intensive approach, gathering outside insights, research and receipt data to formulate a tactical strategy. It is also examining how Hershey can better partner with retailers to make it easier to find products that are acceptable in the waiver environment, particularly in the confection space.
When it comes to GLP-1, teams are working to ensure its participation can meet the need for protein.
"As we think about the consumer in these dynamics, there's the role of understanding and testing our plans and then also finding ways to capitalize where we can against these trends," said Voskuil.
Data is at the core of Hershey's battle against cocoa inflation as well. The company now has increased visibility into the fundamentals — such as pollinization trends, weather trends, fertilizer use, pod counts — so it can make more informed decisions.
Reaping the Benefits of a New Operating Model
Hershey is able to make these data-led decisions through its common data platform — a back-office system that is leaner than before and leverages AI not to just drive savings, but also impact and efficiency, according to Voskuil.
Before the new IT system, it would have been difficult to integrate data and make these types of decisions, he said.
[Also: How Hershey's "digital lean" transformation is overhauling manufacturing operations]
Another benefit is a more holistic view of the company's needs as Hershey navigates conversations with customers.
"Prior to this, we would go to customers and have three different dialogues. We talk about functional snacking, we come back and talk about salty and then we come back and talk about confection," said Voskuil.
Hershey's customers requested a more efficient approach that allows all areas of the business to be represented. An example of this occurred in preparatory discussions for the upcoming July 4 holiday, for which Hershey brought in the underrepresented confection side of the business into the conversation.
"I mean you don't think about eating chocolate necessarily on a hot summer day, but our sweets portfolio is perfect in some of these events. And for the first time, we've been able to integrate those kinds of conversations, saying, 'Hey, how does our whole portfolio play for an event like that?'"
In that same vein, with the new, cohesive data model, Hershey has been able to develop a more integrated supply chain, sharing scale for every business area across marketing resources, activation activity and the retail sales team.
"Salty was never neglected, but they have access to a bigger portfolio of capabilities than they have before," said Voskuil.
