The second a brand like Hershey stops being culturally relevant, says CEO Kirk Tanner, you should be worried. So he explains exactly what he’s doing to make sure that never happens. Tanner also reveals why GLP-1 (glucagon-like peptide-1) users are actually good for the candy business, how AI is now routing Hershey’s sales force in real time through Target and Walmart, and all the ways an iconic brand finds new energy.
This is an abridged transcript of an interview from Rapid Response, hosted by former Fast Company editor-in-chief Robert Safian. From the team behind the Masters of Scale podcast, Rapid Response features candid conversations with today’s top business leaders navigating real-time challenges. Subscribe to Rapid Response wherever you get your podcasts to ensure you never miss an episode.
You spent a lot of your career at PepsiCo. And I’ve always thought about, whether it’s Hershey’s or whether it’s Pepsi-Cola, a lot of it is you’re selling the same product year after year. I mean, there is a core product that, in some ways, you don’t want to change because that’s what people are after, right? So you have to think about selling it or engaging in a different way, even if the product is remaining the same.
Yeah, you have to be culturally relevant. I think that’s really important. The second you’re not culturally relevant with your brands, like Hershey, then you should be worried. When you are watching the Olympics this year, the Winter Games, and we had these moments of celebration and recognition from parents with their child athlete, it was just this connection with what’s happening today. Cultural relevance is happening all around us, so you have to keep pace with where culture is moving and keep your big brands in that space.
Hershey’s a 132-year-old company, and that sort of iconic status gives you history and nostalgia, but Hershey hit some criticism this year over recipe changes in some Reese’s products. Brad Reese, grandson of H.B. Reese, went public with some complaints. Were you surprised? Are there any lessons from that experience?
There’s always critics, Bob. I think the most important thing to do is to listen to consumers and stay engaged with what they have to say. The Reese’s brand is an exceptional kind of brand that is now playing worldwide. We’re taking it to places like the U.K., we’re taking it to Mexico, Brazil, all these places, to give consumers an experience. And look, we’ve done a lot of research around our brands and how people feel about them, how we can always make them better. Reese’s delivers something unique and different, and that’s what I’m excited about.
I’m curious how your plans at Hershey are informed by your time at PepsiCo. Some of that time, you worked under Indra Nooyi, who parsed the portfolio into what she called good-for-you products and fun-for-you products. Hershey acquired LesserEvil organic snacks last year. You already own SkinnyPop. Is that part of the framework that you use?
So SkinnyPop, Dot’s Pretzels, LesserEvil—those are permissible snacks that consumers are looking for, and that’s where the growth is, in salty. So we’re building a business of permissible snacking. I would say the 32 years that I spent at PepsiCo really just taught me how to listen to the consumer. One of my hobbies is just going into the store. When I leave on the weekend, I do the shopping, and sometimes I come back in two hours, three hours. I’ll just spend time in the stores listening to customers, asking customers why they buy certain things.
Are there any things that people have told you on your visits to the supermarket that have impacted or reinforced the way you think about the company and where it should go?
Yeah, absolutely. Now I’m asking consumers that are on GLP-1 what they prefer. How do you think about the category? I’m always asking customers, “What is missing?” Because I’m always thinking, is there something that we can be working on for the future?
How much are GLP-1s changing the marketplace right now? Whether a threat or otherwise, how much are snacking habits shifting?
Yeah. Well, a couple of things that I’ve found directly from some consumers, and from a lot of the research that we’ve done, is the category’s been very resilient with GLP-1 users. They’re not wanting to compromise the things that they love, and they know they have control. It’s almost a bit of freedom, which means they’re not looking to move away from the favorite things that they enjoy. Now, they’ll enjoy less of them, but the important thing is we offer a lot of choice and, I’d say, portion control. I mean, over 30% of our portfolio is in portion control so that they can really have what they want in the size and quantities that they need.
I mean, I’ve seen these predictions, which don’t seem to be showing up necessarily in the numbers, but that, yes, if I’m a GLP-1 user, I might still enjoy my snacks. I might be having less of them, and maybe I am going to still be spending as much, but am sort of moving up the food chain, so to speak, spending more on a smaller amount of treat. Is that anything you’re seeing? Is that something you feel shifts your portfolio?
Premium is still pretty small in the category, but it’s growing three times faster than the category, so consumers are looking for experiences like that. We are innovating in that premium space to capture that opportunity and to capture that growth. The Hershey Creme Bars, Cadbury as well, our Brookside business. Again, premium is relatively small in the scale of things, but it’s important for growth.
In the year you’ve been at the company, operationally you’ve integrated pieces of the business into what you call One Hershey. Is this a reset where, over time, the company’s parts had become a little too siloed and you’ve drawn them back together? Or is there something systematic that you’re responding to?
When you think about a supplier-customer relationship—our relationship with Walmart, Target, Costco, Sam’s, 7-Eleven—we want to be a growth driver and easy to do business with. So when we’re showing up with leaders over salty, leaders over our confection business, and leaders over our functional business separately, versus showing up as One Hershey, we can bring the portfolio together. Then it’s in our control. I think it’s really important to control what you can control. Execution is one of those things.
I can imagine it was structured the other way previously because the risk was that it could become too complicated, or incentives might not be as clear when you put things together, right? These are the cycles businesses go through sometimes: put them together, take them apart.
A couple of things had already been underway. The supply chain operation was already One Hershey. How we interfaced with the customer was not One Hershey. So the foundation and the groundwork for One Hershey had already been done. I took it to the next level and said, “Look, let’s integrate at the customer.” I went and talked to our customers about how we show up, how we could be better suppliers, and how we could be better growth partners. A One Hershey approach was the feedback I got, and that we got, that would let us bring our best. As we build our salty portfolio, it needed more attention. It still needs more attention. Our sales force, highly skilled in executing our confection business, now has the opportunity to execute our salty business right alongside it.
Having it be One Hershey allows you to integrate all the data, which I guess is so important across those different customers and those different brands.
That ability to gather that data, collect it in one place, and have it at the fingertips of all of our people is another reason we were ready to go with One Hershey right now. We’ve become much more efficient with AI tools. Our sales force has a list of the biggest opportunities in front of them, instead of having to choose, decide, and spend a lot of time collecting data. All that’s done for them, so it says, “Hey, Kirk, you’ve got to head to Target 7575. That’s your biggest opportunity today. Your next stop: Walmart. Your next stop: Sam’s Club.” Then it gives me those activities when I walk in the store, showing me how I build the business. It’s much more dynamic and opportunity-based.
