The Hershey Company (NYSE:HSY) Q4 2022 Earnings Call Transcript

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Michele Buck : Yeah, I mean, as we look at some of the investments that we’re making in our employee base, clearly, one of our key strategic goals this year is really to integrate scale our salty business. And so we are adding some increments of talent there to really make sure that we have the right skillsets, and that we have all the employee base and talent needed to do that heavy lifting and the work, some of that also around improving our planning system. Some of the things that whey we buy a smaller company, we need some more sophisticated capabilities. Then obviously, given a lot of the work across the business on supply chain, where we are continuing to invest to build capacity and resiliency in the network. We have made investments in supply chain talent as well.

Bryan Spillane : Okay, but it’s not specifically adding merchandisers or like front — more people, frontline sales people?

Michele Buck : Oh, no, no.

Bryan Spillane : Okay. Okay. And then the second, just was related to the kind of the thinking behind the double digit increase in advertising and consumer spend. Is that partly a — sort of a function of just inflation has been so persistent. Now obviously, you’ve got price increases on your own product lines, but consumers are just seeing — have seen a lot of inflation across a lot of consumables and is it — if you’re going to have that level of pricing, you really need to advertise in order to sort of make sure consumers stay engaged, because they’re going have to start making some choices. Or was there something else that kind of drove the decision or the need to increase advertising at that rate?

Michele Buck : Yeah, absolutely. So our long term model, we believe in advertising. We’ve seen the impact and the returns that we get on advertising in terms of having very strong ROI. So we take a very databased approach to media spending, and we invest where we see that incremental profitable growth. Over time, we do know that that advertising builds consumer connectivity. And we know that, that consumer connectivity is — what part of what helps us to have the elasticities that we do. People are connected to our brands. And during the tough times, we know that that connectivity leads to them continuing to buy. So yes, it is important during an inflationary time, and we’ve done statistics over that, analysis to validate that.

And then as we reduced spend last year really due to capacity constraints. And we did see an impact in demand on several of our brands. And so those are really the priorities where we are reinvesting this year. And we’re also investing in some of our whitespace opportunities, like gummies and better for you to strengthen the business, as well as our salty brands, where we’re really in a major growth mode, gaining household penetration, gaining market share, and we want to continue that momentum.

Bryan Spillane : Right. Thanks, Michele.

Michele Buck : Sure.

Operator: Thank you. Our next question comes from line of Michael Lavery with Piper Sandler. Please proceed with your question.

Michael Lavery: Thank you. Good morning.

Michele Buck : Good morning.

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