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January 29, 2007

CHINA: Hershey and Lotte unite for Chinese joint venture

As part of a strategic alliance to explore marketing and distribution opportunities in the US and Asia, US confectioner Hershey has formed a joint venture with Korea’s leading confectionery and ice cream maker Lotte Confectionery to manufacture Lotte and Hershey products for the Chinese market.

As part of a strategic alliance to explore marketing and distribution opportunities in the US and Asia, US confectioner Hershey has formed a joint venture with Korea’s leading confectionery and ice cream maker Lotte Confectionery to manufacture Lotte and Hershey products for the Chinese market.

The manufacturing facility, located in Jinshan, near Shanghai, will make a variety of Hershey’s, Hershey’s Kisses and Reese’s products, allowing Hershey to expand its business in China. It will also enable Hershey to increase its presence in high-potential Asian markets, including Korea, Japan, Taiwan, the Philippines and other markets, providing products for distribution these areas, the company said. The facility is expected to be in operation by June 2007, with products in China by this August.

Lotte and Hershey will cooperate to distribute Hershey’s products in Korea and Japan. The companies will continue to expand their relationship by leveraging the key regional strengths of both companies.

“Our strategic alliance with Lotte gives Hershey immediate manufacturing scale and expertise in China, an important global growth market for our company,” said JP Bilbrey, SVP, president International Commercial Group. “We know our brands appeal to Chinese consumers, and we are taking a significant step in building the supply chain capabilities to bring our products to market.

“Working with Lotte, we’ll be able to produce affordable products in the right flavours and formats for the local Chinese market, as well as regional Asian markets. The manufacturing facility in Jinshan also gives us the flexibility to make products closer to our consumers, bringing locally relevant and innovative new products to markets faster and fresher.”

The agreement also sees Hershey providing Lotte with expertise and distribution capabilities in the US. The Hershey Company will help test and distribute Lotte’s successful Xylitol gum and a variety of other products, the companies revealed.

Further terms of the joint venture were not disclosed.

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