Demand for s'mores spiked in areas with most COVID-19 cases, the CEO of Hershey says - and the company tracked infection rates to decide its ad spend

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Demand for s'mores spiked in areas with most COVID-19 cases, the CEO of Hershey says - and the company tracked infection rates to decide its ad spend
Hershey's Milk ChocolateScott Olson/Getty Images
  • Hershey CEO Michele Buck said demand for s'mores ingredients spiked in areas with high COVID-19 rates.
  • The company tracked cases and adjusted its ad spending to target those areas, Buck told CNBC.
  • Q4 profits for Hershey rocketed 41.5% to $405.1 million, the company said Thursday.
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As COVID-19 spread around the US, so did demand for s'mores, according to The Hershey Company.

"This past year, we noticed that wherever COVID case counts were elevated, we were seeing increasing sales of s'mores ingredients," Hershey CEO Michele Buck told CNBC on Thursday.

The company said chocolate sales were up to 50% higher in locations where COVID infection rates spiked, CNBC reported.

The Pennsylvania chocolate maker adjusted its digital marketing to pinpoint these areas, Buck said.

Hershey's North American advertising and marketing expenses climbed 4.9% in the last three months of 2020. Buck on Thursday said the company used COVID-19 trackers to make better use of those advertising dollars, anticipating demand in areas where the virus was spreading.

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"And then we were able to use the case count trajectory as a foreshadow of where we should focus some of those efforts, and build displays, and put media in those markets," Buck said.

Read more: Hershey's chief growth officer lays out how the company boosted profits by 13% thanks to two new approaches to selling chocolate and mints

The company's overall Q4 sales climbed 5.7% to $2.19 billion from the year-earlier period, it reported on Thursday. Hershey's profit, meanwhile, spiked 41.5% to $405.1 million, the company said.

Last fall, Hershey said chocolate and peanut butter sales were booming, in part because people were baking more.

Erin Lash, senior director at Morningstar, wrote in a research note on Thursday that "Hershey's fourth-quarter performance is evidence that the resiliency it showed in the all-important Halloween season wasn't a fluke."

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Morgan Stanley analysts wrote in a research note on Friday that the company started shipping Valentine's Day and Easter candy earlier this year. The company had done the same with Halloween candy in 2020, sending it to stores about a month ahead of its normal schedule.

Analysts at Credit Suisse early in 2020 had predicted a spike in sales for Hershey, recalling a similar sales boost from the recession between 2008 and 2010.

On a conference call with analysts on Thursday, Buck said some of the company's other products have benefited from COVID-19, too.

Twizzlers had sold well because people are having more movie nights at home, she said.

"Products like Twizzlers ... turned out to be incredibly important for consumers during this very difficult time, where they wanted to cling to as much normalcy as possible," Buck said.

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