Hershey’s new president and CEO John Bilbrey today (26 July) outlined his confidence in the US confectioner’s overseas operations but was coy about the future of its Indian joint venture.
Speaking to analysts after Hershey published its second-quarter and half-year results, Bilbrey said the company was keen to expand its international business, which focuses on Latin America and Asia.
However, the Hershey chief said little about the future of its venture in India, which has been the subject of speculation in recent weeks.
Earlier this month, reports in India claimed Hershey’s partnership with local conglomerate Godrej had come to an end. A day later, however, a Godrej executive told Reuters that the venture, set up in 2007, was still in operation.
Bilbrey said today that Hershey had a “great deal of respect” for Godrej and insisted India was an “important market” for the company. “We’ll continue to participate in the Indian market.”
However, he added: “How we participate there could potentially look different but we feel very good about the potential of our businesses in India.”
When pressed further on the future of the Godrej Hershey venture, in which the US company owns a 51% stake, Bilbrey said: “I want to make sure that I’m not making too many comments around our joint venture. As a matter of policy, we frankly don’t do that.
“We’ve done our share of learning in India. We think that the brands and the position that the joint venture offers us is a good starting point. I’m not going to make to comments that predict anything about that particular relationship. We continue to believe India is a great market. It’s a market we want to participate in. The story in India is a longer one, say, compared to China. Patience is certainly going to be a virtue in getting it right.”
Bilbrey, who, in his previous roles at Hershey, has overseen its operations outside the US, said the company was “on track and performing well” in its international markets in 2011.
In February, Hershey set out plans for annual sales from its business outside the US to reach US$1bn in 2015. In 2010, sales outside the US were $862m. To meet the $1bn target, Hershey would need its international sales to increase by 15% a year; today, Bilbrey estimated that overseas sales could rise by 20-25% in 2011.
“We really want to continue to expand our geographic footprint outside of the US,” Bilbrey said. “We’re talking about the most attractive markets for us where we can get growth – where there’s a lower cost of entry, there’s not consolidated trade and not necessarily as a consolidated competitive set. The story is still really in front of us in terms of overall market growth. We continue to look at Mexico, China, Brazil and India.”
Bilbrey said China was Hershey’s “fastest-growing international market” and revealed that the company was looking at sites for an R&D centre in Asia.
“We’re in the process of determining the location, scope and size of an Asia R&D facility that will support our businesses in that region,” Bilbrey said. “We believe this is a logical next step in building out our international footprint.”