A Behind-the-Scenes Look at How Hershey’s Gets Ready for Halloween

Today is the Super Bowl of candy sales for the 123-year-old confectioner

Oct. 30 is the busiest day of the year for the candy colossus.
Hershey's

Though Halloween dates back to the 10th century Celtic festival of Samhain, or “summer’s end,” the earliest mention of trick-or-treating dates to 1927, when a Canadian newspaper spoke of “youthful tormentors” at the door “demanding edible plunder.” And, nearly a century later, they still are.

This year, according to Prosper Insights and Analytics, Americans will hand out $2.7 billion worth of candy to the little ghouls who come knocking, and candy sales are forecast to be up by 5.5 percent, the biggest increase since 2011. According to the National Retail Federation, or NRF, while only about half of Americans plan to wear costumes or decorate their homes for Halloween, 71 percent will give out candy. (The National Confectioners Association puts that figure at 77 percent.) Overall, the retail value of Halloween 2017 comes in at a staggering $9.1 billion.

“With roughly 180 million people celebrating Halloween in bigger, grander and more robust ways every year, Halloween is now more than just a day,” said Dave Mastovich, president and CEO of integrated marketing firm MASSolutions. “It’s a whole season of marketing opportunities that requires a strategic, creative focus.”

Few brands are more aware of this picture than Hershey’s, the confectionary giant with annual sales north of $7 billion. The 123-year-old candymaker counts over 80 brands in its corporate stable, including classics like Reese’s Peanut Butter Cups, Whoppers, Mr. Goodbar and Kit Kat. For everyday Americans, Halloween is just a fun night. For Hershey’s, it’s the most critical sales occasion of the year.

“From a retail perspective, it’s our Super Bowl,” said Hershey’s chief sales officer Rob Gehring. “It’s as big as it gets.”

So the pressure is on, especially today. While Americans might spend weeks working on their Halloween costumes, candy purchases for the holiday tend to take place at the very last minute—on Oct. 30. It’s the busiest day of the year for the candy colossus.

Courtesy of Hershey's

The importance of maximizing sales inside such a short window of time means Hershey’s mobilizes armies of employees in the run-up—marketers, retail coordinators, package designers—in an effort that’s largely invisible to consumers.

Planning for this Halloween actually started 12 months ago in the immediate aftermath of Halloween 2016.

“We start out a year in advance—the season before—because everyone’s in that mind frame,” said Kristen Riggs, Hershey’s vp and gm of brand commercialization. The company crunched data on which candies sold well and where and which sorts of packaging worked or didn’t, assembling it into a predictive model.

For example, Hershey’s package-design team decided to try a new glow-in-the-dark wrapper last year, one that will go into formal (if quiet) testing this year.

“We’re not screaming from the rooftops, but we’ll put it out there and watch the data,” Gehring said. If the glowing chocolate performs well, it’ll become a national rollout for 2018.

Of course, Hershey’s primary task is making enough candy and, critically, knowing where to send it. The company operates seven factories in the U.S., each with specialized production lines. The plant in Robinson, Ill., makes Heath bars. Gum and mints come from Memphis, Tenn. And the trio of Pennsylvania plants—Lancaster, Hazleton and Hershey—churn out the requisite tonnage of Twizzlers, Kit Kats and Reese’s, respectively.

“We’ll work 12 months out to understand what our capacities are,” Riggs said, and project how much candy to make. This year, the assembly lines will be whirring a little faster. Hershey’s internal research indicates that 2017 candy sales should grow 4 percent over last year.

The bigger challenge, though, is determining how to mix the candies and where to distribute them. Hershey’s sells most of its Halloween candy in variety packs, big plastic bags that feature its most popular brands. The top three sellers are Reese’s, Kit Kat and Hershey bars, in that order. These can come in bite-size or king size. Many come in seasonal shapes (Reese’s Peanut Butter Spooky Eyeballs Snack Size, for instance).

Courtesy of Hershey's

But with so many brands under its roof, Hershey’s execs must decide which ones go into which bags. A 220-piece candy bar assortment, for example, may feature Milk Duds, Kit Kat, Hershey bars, Reese’s Peanut Butter Cups, Almond Joy and Whoppers. But a 90-piece bag may have only four of those brands. There’s one bag featuring only peanut and caramel candy, another with three varieties of just Hershey bars, and so on.

The mixes depend on what retailer will be selling them, Riggs said. For instance, the category killers like Target and Walmart will get the larger bags, while retailers like Dollar General will get the smaller, lower-priced ones. On top of that, Riggs said, “we have different products going into stores based on where they are regionally.” Hershey’s research has shown that Midwesterners, for whatever reason, have a demonstrable preference for Reese’s, while the Northeast has a quantifiable affinity for York Peppermint Patties.

Courtesy of Hershey's

A few years ago, Hershey’s cooked up the idea of making a huge variety bag priced at $25, steep for Halloween candy. Gehring recalled retailers saying, “What are you thinking? The bag isn’t moving.”

But there was a strategy. While the giant bag did sit on the shelf in the weeks leading up to Halloween, it began to sell during the last 10 days before Oct. 31. The reason was anxiety—last-minute shoppers, desperate to stock up just before the big night, dashed into stores and grabbed the big bag. Problem solved.

“That’s been one of the things we’ve come to understand about [Halloween] shopping behavior,” Gehring said.

As you might expect, Hershey’s also deploys significant resources to marketing. Recipes on the web, shopping reminders via social media and the TV spots that begin running in September are all very important. But for this holiday especially, in-store displays are crucial, since only 22 percent of shoppers buy Halloween candy online, whereas 26 percent and 47 percent will buy it in grocery and discount stores, respectively, according to NRF.

Inside the store, Hershey’s has found that a kind of one-two punch works best.

“You always want something at the entrance that sets the tone,” Gehring said.

The company usually sets up props, including pumpkins and bales of hay, as reminders of the approaching holiday. After shoppers pass the entrance display, Gehring likes to plan for a 10- to 30-foot buffer space before setting up a huge seasonal section where the candy itself will be displayed. Here, the props come out in earnest—fake spider webs, a giant pumpkin, ghosts strung from the ceiling and so on—and here is where the candy will be tossed into the shopping carts. The design of the candy bags helps encourage that, and Hershey’s takes considerable pains to design packaging heavy on the orange and purple, frequently decorated with bats and mummies and black cats.

Finally, though most people still associate Halloween with kids going trick-or-treating, Hershey’s has come to realize that the audience it’s really speaking to is adults, not just the ones buying candy for Halloween parties, but the ones that raid their kids’ treat bags at the end of the night and confiscate the candy they want for themselves. (Research from the National Confectioners Association shows that 72 percent of adults raid their kids’ candy stashes, and that’s only the ones who admit to doing it.)

“We did a lot of research [about this],” Riggs said. “Mom and dad do ‘Halloween taxing’ because they took their kids trick-or-treating.”

In fact, she said, when it comes to Halloween, “Mom and dad are more excited than the kids.”

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