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Hershey ponders next step in China
Source: Agencies |
September 19, 2012, Wednesday
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HERSHEY Co, which agreed to buy out its joint venture partner in India, is weighing its next step in China.
The US candy maker owns a factory in China with South Korea's Lotte Shopping Co. Current demand for the two companies' products uses 90 percent of the factory's capacity, and Hershey Chief Executive John Bilbrey sees it exceeding that very soon.
"We're looking now at what do we do next. Do we joint venture again on an additional factory or do we build our own factory? Do we do it in Southeast Asia? We haven't answered that question," Bilbrey said in an interview at the company headquarters in Hershey, Pennsylvania, ahead of a new factory opening.
Hershey just spent US$300 million to modernize and double the size of a factory less than 3.2 kilometers from where its founder Milton Hershey opened his first chocolate factory in 1905.
The updated plant, which was set to open officially yesterday, can make 70 million Hershey's Kisses a day, up from 40 million before.
As for China, Bilbrey said another option could be to move into Lotte's other factories there, space permitting.
"I think we know enough to build (a factory) on our own, but that may not be the most financially viable way to do it," Bilbrey said. He expects to make a decision over the next 12 to 18 months.
Many international joint ventures are structured with eventual exit plans. So Bilbrey said it was no surprise when Hershey moved earlier this month to buy out its Indian partner, Godrej Consumer Products.
But he said food is not a core competency for them. ''We got ourselves to where it would be better for us to go on our way," he said.
The US candy maker owns a factory in China with South Korea's Lotte Shopping Co. Current demand for the two companies' products uses 90 percent of the factory's capacity, and Hershey Chief Executive John Bilbrey sees it exceeding that very soon.
"We're looking now at what do we do next. Do we joint venture again on an additional factory or do we build our own factory? Do we do it in Southeast Asia? We haven't answered that question," Bilbrey said in an interview at the company headquarters in Hershey, Pennsylvania, ahead of a new factory opening.
Hershey just spent US$300 million to modernize and double the size of a factory less than 3.2 kilometers from where its founder Milton Hershey opened his first chocolate factory in 1905.
The updated plant, which was set to open officially yesterday, can make 70 million Hershey's Kisses a day, up from 40 million before.
As for China, Bilbrey said another option could be to move into Lotte's other factories there, space permitting.
"I think we know enough to build (a factory) on our own, but that may not be the most financially viable way to do it," Bilbrey said. He expects to make a decision over the next 12 to 18 months.
Many international joint ventures are structured with eventual exit plans. So Bilbrey said it was no surprise when Hershey moved earlier this month to buy out its Indian partner, Godrej Consumer Products.
But he said food is not a core competency for them. ''We got ourselves to where it would be better for us to go on our way," he said.
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