Malaysia will be latest international market to house Hershey facilities

Malaysia will be latest international market to house Hershey facilities

Hershey plans to make another move to expand its international business with the construction of a new plant in Malaysia.

The US confectioner said it would spend US$250m on a project to build the factory in Johor, a state in the south of Peninsular Malaysia. The company, which has facilities in India and China, said having a plant in Malaysia would give it "easy distribution access" to over 25 markets in the region.

"We are investing heavily in the region as the middle class continues to grow and consumers increasingly want chocolate and new confectionery products," Peter Smit, senior vice president for Hershey's operations in Asia, Europe, the Middle East and Africa.

Building work on the 700,000 sq ft plant is expected to be completed in early 2015. The site will produce four of Hershey's five "global brands", including its namesake chocolate and Reese's.

Smit added: "We continue to build our iconic brands in the region as China becomes the second-largest market for Hershey in the world."

Hershey, long criticised for having business too wedded to the US, has stepped up its international expansion in recent years.

In May, Hershey opened an R&D centre in Shanghai as part of plans to expand in Asia. In June, the company launched a brand outside the the US for the first time with the introduction of Lancaster milk candies in China.

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HERSHEY, Pa.--(BUSINESS WIRE)--The Hershey Company (NYSE: HSY) today announced it will build a new confectionery manufacturing plant in Johor, Malaysia, to meet the growing consumer demand for its products in its fastest-growing region.

“Consumers across Asia are discovering a range of Hershey confectionery products, and China in particular is growing faster than any other market,” said Terence O’Day, Senior Vice President and Chief Supply Chain Officer, The Hershey Company. “Our new Malaysia plant will feature the latest confectionery manufacturing technology and will complement production at our existing joint-venture plant in China. Adding this new manufacturing capacity will put us in a strong position to meet the growing demand for our products across the region.”

Major Investment in the Region

Hershey has been investing in its Asia business for several years, building its presence across the region. The Johor plant, a $250 million USD (RM816 million) investment, represents the single- largest investment in Asia during the company’s 18-year history in the region.

“We are honored that Hershey selected Malaysia for the site of its next manufacturing plant,” said Datuk Noharuddin Nordin, Chief Executive Officer of Malaysian Investment Development Authority (MIDA). “This is a testament to the continued attractiveness of Malaysia for multinationals making substantial commitments to the region. This project will bring years of positive economic benefit to Malaysia in the form of jobs and business for local suppliers.”

State-of-the-Art Technology

The new plant will include innovations in automated candy-making technology, including proprietary equipment and systems developed to Hershey’s specifications.

The plant’s capabilities will include high-speed wrapping machines featuring proprietary, specially engineered wrapping technologies.

Strategic Location

The plant’s location in Johor is a strategic geographical choice that provides Hershey with easy distribution access to more than 25 markets across Asia. Malaysia also offers a well-educated potential workforce, a stable political environment, a strong supply chain infrastructure and globally recognized Halal food manufacturing certification that is an advantage for products sold in the region.

The Malaysia plant investment continues Hershey’s ongoing modernization and expansion of its global supply chain to position the company for its next 100 years of growth. This includes the company’s “Project Next Century,” a $300 million investment in its manufacturing and logistics, which culminated with the opening of the world’s most technologically advanced chocolate making facility in the company’s hometown of Hershey, Pa.

After Hershey completes the building structure in early 2015, the Malaysia plant will be one of the largest facilities in the company’s global manufacturing network with 700,000 total square feet. The company has nine plants in the United States as well as facilities in Canada, Mexico, India, Brazil and China. The Malaysia plant will also have the capability to produce the broadest array of finished products of any Hershey factory outside of the United States and Mexico, including millions of Hershey’s Kisses each day.

Fueling Regional and Global Growth

The plant will produce four of Hershey’s five global brands, which include: Hershey’s KissesIce Breakers, Reese’s and Hershey’s Milk Chocolate bars. Hershey is expanding its global distribution of these brands as part of the company’s ambitious global growth vision to achieve $10 billion in annual revenue by 2017. Hershey’s global growth plans include focusing on key international focus markets, such as China, and expanding its consumer product portfolios around the world. Hershey expects international sales to reach approximately $1 billion USD by the end of 2014.

“We are investing heavily in the region as the middle class continues to grow and consumers increasingly want chocolate and new confectionery products,” said Peter Smit, Senior Vice President, Asia, Europe, Middle East and Africa, The Hershey Company. “Our ability to produce high-quality products tailored to local taste preferences and to meet rapidly growing demand will be keys to our success. We continue to build our iconic brands in the region as China becomes the second-largest market for Hershey in the world.”

Local Employment Opportunities

Hershey’s presence in Malaysia will bring new job opportunities. The company plans to hire locally to staff hundreds of plant positions as well as management roles. “With accelerating growth and a commitment to continuous innovation, it is an exciting time to join Hershey and contribute to the success of an iconic American company in Asia,” added Smit.

In addition to its five global brands, Hershey has more than 80 total confectionery brands sold in approximately 70 countries around the world and is ranked by Fortune magazine as among the 500 largest U.S. companies. Hershey has been the leader in chocolate confection in North America for more than 100 years. Now the company’s famous brands and products are becoming favorites across Asia.

A Commitment to CSR and Supporting Communities

Hershey’s move into Malaysia will also mean the company will extend its social responsibility efforts and begin to work with local nonprofits and community organizations. The Hershey Company has a long-standing commitment to “doing well by going good” in the community with a special emphasis on programs that support women and children in need. As the company has grown globally, so has the global scope of its CSR programs and support. Hershey employees in China, Philippines and India currently support important local causes including educational programs for children and disaster relief efforts.

Original source: Hershey