My Take on the Chocolate Giant
or why the CEO’s and decision makers at Hershey Company are dicks.
I am sure we have all heard about the decision Hershey Company made to quit using cocoa butter due to the current economy. If not, a quick summary it’ll no longer be Milk Chocolate you are getting, but ‘chocolatey goodness’ when you drop your $1.20 for a candy bar, because the company has decided to eliminate using cocoa butter to cut costs, and go to using vegetable oil as a substitute.
I know I cannot speak for everyone out there, but I must say when I spend my $1 for an indulgence of candy, I want to know that I am getting something good, not something chocolatey. But I have a tendancy to take things a step too far.
After catching a short bit on Adult swim about the profits that different companies make ‘per employee’ in gross sales, I decided to do a little investigating into the Hershey Company along these same lines. While I could not find Gross sale (before taxes and costs) numbers, I did find net sale (after costs and taxes) numbers. In 2007 The Hershey Company netted almost 5 billion dollars in sales, with approximately 13,700 employees they are a very large company making very large profits. (for the adult swim and/or math junkies out there this is over 3.6 million dollars NET PROFIT to the company per employee they employ) Here is an exerpt from the 2007 report:
For the full year 2007, consolidated net sales were $4,946,716,000 (source reuters Hershey report summary)
I cannot even begin to fathom that much money, but I can fathom the taste of the new chocolate formula, it is yucky (in layman’s terms)
It is said that the change was to increase profit margins due to the rising cost of cocoa butter and a struggling economy. Even if the ‘rising cost’ was $500,000,000 a year in raised costs, that is still roughly a 4.5 billion dollar profit margin for the company.
Companies like Hershey’s that put profits before product quality need to realize that if the quality lacks the creamy goodness we’ve all come to know and love, they won’t have to worry about profits in the long run, because there won’t be customers to buy their products. We will take our sweet money somewhere else. It isn’t the stock holders they should be concerned about — it’s the consumers.
And that’s all folks.