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Hershey to buy China confectioner

confectioner2Hershey is the maker of the popular chocolate Kisses
Hershey plans to buy a Chinese sweet maker for $584m (£357m) in cash and debt as it expands into the worlds fastest-growing consumer market.

The firm said it would acquire Shanghai Golden Monkey (SGM), one of the worlds largest confectionary and chocolate companies, in two phases.

The deal marks one of the largest overseas purchases by Hershey.

It also comes as foreign companies compete to come up with products that cater to Chinas different tastes.

Hershey company president and chief executive John Bilbrey called the deal a win for both companies.

The strength of SGMs confectionery portfolio and overall distribution capabilities, especially within the traditional trade, is an opportunity for us to leverage scale to make the iconic brands of Hershey and SGM even more powerful, he said.

Shanghai Golden Monkey founder, chairman and general manager Zhao Qisan said: Hershey and SGM have similar cultures and strategies related to brand building and selling capabilities and were pleased that a company of Hersheys stature sees the potential in our great company.

Shanghai Golden Monkey, which is privately held, is expected to post sales of $225m this year.

It makes items such as strawberry-flavoured cheese chews and seaweed-flavoured wafer sticks.

Sweet spot

Pennsylvania-based Hershey posted sales of $6.6bn last year and has identified China as its primary international market.

Sales of chocolate, sweets and gum in China reached more than 79.6bn yuan ($13bn) in 2012, according to market research firm Euromonitor International.

To capitalise on this potential, the company plans to increase the number of its China stores and salespeople.

Earlier this year, Hershey also introduced a condensed-milk sweet in China called the Lancaster, its first product specifically designed for a market outside the US,

Hershey International president Humberto Alfonso said buying Shanghai Golden Monkey fits Hersheys acquisition criteria.

It has distribution into channels where Hershey products have yet to penetrate, he said.

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