Hershey's decision to pick 2011 as the year to make its mark in the UK is interesting timing. After all, US confectionery companies are hardly flavour of the month on this side of the Atlantic as the fallout from Kraft's takeover of Cadbury last year continues to be felt.
Nonetheless, since appointing a UK distributor in August, Hershey's has signed deals with Sainsbury's and Asda to stock its Kisses brand. It is also finalising an agreement with Asda to stock several of its other lines on an exclusive basis, as part of its worldwide distribution deal with the supermarket's owner, Wal-Mart.
The $5.3bn global brand, which derives 14% of sales from outside the US, has been in the UK since 1996, when it rolled out its chocolate syrup. Hitherto, however, Hershey's presence has remained low key. The challenge now will be to attract consumers brought up on the very different taste of European chocolate; a comment on a recent Guardian forum described Hershey's as tasting 'like earwax'.
Compared with the saturated US confectionery market, the UK offers appealing growth prospects for big brands (see table).
Moreover, Hershey's 'is under pressure to make more money', according to Allyson Stewart-Allen, director of International Marketing Partners. She works with US brands looking to expand into the UK and believes that once Hershey's realised it was unable to raise the funds to make a counter bid for Cadbury, it decided to 'take the brand elsewhere to make that money'.
Before it sees any returns, however, Hershey's will have to figure out how to market products that have become mainstays in the US, such as Reese's Pieces, to UK consumers.
'Hershey's definitely needs to find a specific positioning for the brand in the UK,' says David Goudge, managing director of innovation agency Brand Development. 'The thing that leaps out instantly is the appeal of Americana. Hershey's is a classic example of this. It's the chocolate you always wanted to try from films and TV programmes.'
Hershey's remains tight-lipped about its UK marketing plans. Nonetheless, Doug McMillon, head of Wal-Mart's international division, has said people will buy the bite-sized Hershey's Kisses, which come in a range of flavours, without much marketing support, as long as there is opportunity for trial.
However, former Cadbury marketing director Phil Rumbol believes that pushing a taste message would be a surprising strategy for Hershey's to employ.
'People acquire a taste for chocolate from the brands they grow up with,' says Rumbol, a founding partner of start-up ad agency 101. 'It's well known that UK consumers typically don't like the taste of US chocolate and vice versa.'
Rumbol suggests Hershey's 'needs to introduce products that are not pure chocolate, but chocolate with other ingredients'. He is sceptical, however, about whether Hershey's Kisses falls into that category.
Having Asda on board will undoubtedly put Hershey's in front of a new audience, but Rumbol questions whether targeting the big supermarkets from the outset is the right strategy. 'The impulse market is where a lot of brand choice is driven. The way to build brands in grocery is by having good impulse distribution and availability, as well as good supermarket distribution.'
Goudge argues that in its desire to cast itself as a global chocolate player, Hershey's risks ignoring this kind of local market characteristic. 'The Wal-Mart connection leads you to think that it's more of a commercial decision driven by strategy and alliances rather than any consumer insight,' he adds.
Stewart-Allen agrees that defining its place in a market already crowded with trusted brands is crucial if Hershey's wants to gain a meaningful foothold. 'If it doesn't localise, it will have trouble. Just taking the US model and imposing it on the UK marketplace is not the right way forward.'
TOP 10 UK CHOCOLATE CONFECTIONERY BRANDS BY VALUE
Brand Manufacturer pounds m % change
1 Dairy Milk Cadbury 410.6 5.5
2 Galaxy Mars 223.6 16.2
3 Maltesers Mars 143.1 5.4
4 Kit Kat Nestle 102.2 -0.3
5 Mars Mars 95.3 -5.6
6 Quality Street Nestle 90.7 7.0
7 Aero Nestle 77.3 12.0
8 Roses Cadbury 74.4 -5.4
9 Thorntons Thorntons 68.4 14.5
10 Cadbury Creme Egg Cadbury 64.7 -1.1
Total sales for year to 2 October 2010.
Year-on-year percentage change
Source: Nielsen