Hershey strikes deal with UK grocers

(BLOOMBERG)

The confectionery giant Hershey is to start selling its chocolate in the UK for the first time on a mass scale in Asda and Sainsbury's next year, in an effort to bite a chunk out of the lucrative European market.

Asda, which is owned by the US retail giant Walmart, will sell a range of Hershey products – including Hershey's Kisses, the chocolate shaped like flat-bottomed teardrops – in the majority of its UK food stores in the first three months of 2011.

The UK's second-biggest grocer said it had an "exclusive licence" to sell a range of the products which will be free of the genetically modified ingredients that Hershey uses in the US.

Asda remained tight-lipped on the other Hershey brands, but given the trademarks the US confectioner has listed in the UK, the supermarket is also likely to sell its Mr Goodbar, Hugs and Reese's Pieces brands.

Sainsbury's will only sell Hershey's Kisses in its larger supermarkets from the first quarter of next year. But the grocer currently sells the Reese's Nutrageous peanut bars made by Hershey.

The UK move by Hershey has raised eyebrows, however, as its distinctive chocolate has often been viewed as at odds with European taste buds.

As part of its drive to ramp up sales outside of North America, Asia and Latin America, however, Hershey wants to muscle in on the Europe market, which is dominated by Kraft's Cadbury, Mars, Lindt and Ferrero. Of Hershey's total revenues of $5.3bn in 2009, only 14 per cent came from Europe. It is also working with Asda's parent Walmart to introduce its products into other global markets.

Doug McMillon, the head of Walmart's international division, said: "We believe people will buy [Hershey's Kisses] without a lot of marketing support if we demo them and let people taste them".

Hershey set up a European subsidiary in August and it is also seeking to hire a manager for a European and Middle East travel retail arm, who would expand its distribution.

An Asda spokeswoman said: "The range has been exclusively developed for Asda and will be in the majority of stores. We are sure our customers will love them." Tesco said "no decision has been made" on selling Hershey products next year but it currently sells Reese's Cups Rich Peanut Butter products. Morrisons said it currently stocks two Reese's brands

Founded in 1894 in Hershey, Pennsylvania, the company was last year linked to a bid for Cadbury before the British chocolate maker was bought by Kraft for £11.4bn.