How Hershey CEO Michele Buck came to create a 'snacking powerhouse'
As a child growing up in rural Pennsylvania, Michele Buck and her family would make the drive to Hershey, less than an hour from their home for a factory tour. Together, they would watch the rectangular chocolate bars zip down the conveyor belt and taste the freshly made sweets as they came off the line.
For Buck, those memories decades ago unexpectedly marked the beginning of a long association between the iconic confections company and the 58-year-old business executive. Today, Buck is the CEO of Hershey, the $27 billion snacking giant famous for churning out billions of its Kisses, Reese's Peanut Butter Cups, Milk Duds and other sweet and salty treats each year.
"[Running Hershey] wasn't something I saw coming, but it's interesting how that all comes together," she told Food Dive in an hour-long interview at the company's headquarters. "Maybe it was meant to be."
Three years into her tenure as the leader of one of America's most storied companies, Buck is proud of the impact she's had so far, even as she carefully plots out what's next for Hershey in an unpredictable food space beset by changing food consumption habits and a pandemic.
"I'm somewhat of a perfectionist, and I've always had a pretty high bar for myself. I'm proud of what we accomplished. I'm also equally always dissatisfied that we're not all the way there," Buck said from her office, where a bowl brimming with candies sits on a nearby table and outside her window, trains filled with sugar and corn-based products pass by on their way to one of the company's plants.
"We have a lot of good stuff here, but there was more we were capable of, and I think [my job when I took over] was stretching the organization to see that we could do things differently and capture even more opportunity," she said.
Buck isn't afraid to disrupt the 126-year-old company she was handpicked to lead. When she took over as Hershey's CEO in March 2017, Buck set out to create a "snacking powerhouse" by accelerating growth in the company's hugely profitable confectionary business and expanding its portfolio into new snack offerings.
As Buck navigates Hershey to win in a marketplace where more competitors are fighting for a share of the consumer's ever-growing snacking dollar, the executive must deftly balance how to make the business more conducive to modern tastes and keep pace with other innovating food manufacturers without losing the nostalgia that has come to define the small-town company.
At the same time, Buck must carefully lead Hershey and its more than 16,000 employees through the coronavirus pandemic that has changed consumer shopping habits and left millions of cash-strapped Americans unemployed, putting pressure on the company's sales.
Analysts who follow Hershey praise the job Buck has done, citing her work in product innovation, acquisitions and her expansion of analytics to better understand the consumer and compete digitally.
Erin Lash, a director of consumer equity research at Morningstar, told Food Dive that Buck wasted no time showing she was committed to making "very direct and specific changes to the business" by meeting with analysts and investors in New York on her first day as CEO.
"She comes in on day one announcing changes that she thought were necessary in the business and then in very short order after, refocusing on the core [and then] knocking off a handful of acquisitions, some of which were sizable," Lash recalled.
During the event, Buck discussed how Hershey needed to take advantage of the company's "wide moat" in confections in the U.S. and focus more of its resources on innovating and marketing its core brands. The new CEO also pledged to return Hershey's fledgling international business to profitability.
"She was willing to pivot the business and didn't feel beholden to where they had been and what they had been doing," Lash said.
Becoming her own leader
Buck spent her childhood growing up about 45 minutes southwest of Hershey in Carlisle, Pennsylvania, an agricultural-producing community with a population of nearly 20,000 people.
As a child, Buck watched her dad, the first in his family to graduate high school, go to classes at night to get a master's degree in electrical engineering while juggling other responsibilities. Her mom grew up on a farm with no indoor plumbing. "I learned very early, the values and virtues of hard work," she told Fortune in 2018. "There is no substitute for hard work."
At age 10, she started with a paper route, added babysitting to the mix in her teens and later had stints working as a bank teller, waitressing during college and peddling Avon products door to door. The jobs, Buck said, gave her financial independence and experience working with people in different environments. After graduating from Shippensburg University with a degree in business, she became a fiscal analyst for the Pennsylvania Department of Revenue in Harrisburg.
Buck's ascension to CEO at Hershey came after working her way up through other big-name food companies. She spent parts of her career working with brands such as Cheetos at PepsiCo's Frito-Lay snack division. At Kraft Foods, she helped develop the first kids yogurt and increased sales of Cool Whip by encouraging consumers to use the topping in festive flag cakes.
In 2005, Buck left Kraft after 17 years and joined Hershey as the company's chief marketing officer. Six years later, Hershey CEO J.P. Bilbrey handpicked her for the position of chief growth officer — citing her business experience, career at Hershey and knowledge of the company, and her ability to build brands that resonated with consumers. She was put in charge of creating Hershey's growth strategy for the next 20 years, which centered primarily on the evolution of snacking.
She was a good confidante, both in pushing back and in being supportive. And that's hugely important for any of us to be the best we can be because that CEO job is — I'm sure she's learning — it's a pretty lonely job at times.
"Part of the power of that program came from her ability to lead it and listen and shape it based upon what she was hearing, not just upon what she might have been thinking more singularly with a small group of people," Mike Wege, who held several executive roles during his 16 years at Hershey and worked closely with Buck for more than a decade, told Food Dive. "It was complemented by really paying attention to what people and the organization were saying about the marketplace, about consumers, about retail, and ultimately, the trends that we needed to be participating in to shape our future."
The job creating Hershey's growth roadmap gave Buck invaluable time in front of the company's board and with Wall Street analysts, Bilbrey told Food Dive, so when "she was being considered as my successor she was really a very complete package."
In Buck, Bilbrey saw someone who shared a similar way of thinking when it came to Hershey and possessed a deep understanding of how to build a relationship with consumers and adapt the company's offerings to their ever-changing tastes. More importantly, she was a person he could confide in when it came to discussing the candymaker's future, even when they didn't necessarily agree.
"She was a good confidante, both in pushing back and in being supportive. And that's hugely important for any of us to be the best we can be because that CEO job is — I'm sure she's learning — it's a pretty lonely job at times," Bilbrey said. "She was never off saying, 'Hey, listen, here's what the crazy guy in the corner office believes.' I think it was always our plan to put the company first."
Bilbrey recalled as CEO he wanted Hershey to develop a meaningful presence in protein and meat snacks. Hershey scooped up premium jerky brand Krave in early 2015, but Bilbrey said the space was fragmented and ripe for further consolidation. He was eager to acquire other players and confessed he "would have been willing to write a big check if we needed to to get something."
But Buck questioned whether it was a sound strategy and if the jerky space could be scaled up through consolidation. The niche is dominated by Jack's Link, which holds more than a 50% market share, and a few other prominent players. After that, it's mostly populated with dozens of smaller, lesser-known manufacturers.
"She was willing to push back and say, 'Hey, there's not going to be a way to do this as we envision and put it all together,'" Bilbrey said. "She was also becoming her own leader despite the fact that I might have said I think we need to figure this out."
A year into his tenure as CEO, Bilbrey was already thinking about who would lead Hershey when he stepped down. The former Procter & Gamble executive was impressed by the work Buck had done, but "felt that she could do more," he said.
One day Bilbrey pulled Buck aside, discussing the need for a succession plan and challenging her to be part of it. "Do you think you want to be a CEO?" he asked her, "because it'll guide how I spend time with you."
Rather than answer right away with an urgency Bilbrey said raises concerns as to whether a person is really into something for the right reasons, Buck paused. The delay reflected her "thoughtful and balanced way of thinking," Bilbrey said.
A day later, Buck came to his office with a decision: "I'm all in," Bilbrey recalled her saying. Buck pressed Bilbrey about his confidence in her. "So you really believe in me?" she asked.
"I believe in you in a way that I want to help you unlock believing in yourself," he responded.
Buck's commitment, while by no means guaranteeing her the CEO position, set in motion the experiences she would need and the jobs she would be asked to perform at Hershey to best position herself for the role. It would affect the time Bilbrey spent with Buck — he would sometimes be harder on her than he might have been on someone not striving for the top job at the company.
While Bilbrey took great care in working with other people at Hershey to foster growth, none of the conversations he had with them had "the importance or weight of this particular discussion" with Buck, he said. "This was the only time when I was a CEO and I was saying to someone, 'Hey, I think you're the person that could do this [job]."
When Hershey's board, which included Bilbrey as chairman, decided in late 2016 that Buck was their pick for CEO, he immediately called her and asked if he could come to her home in the next hour. "It was a beautiful scene. It was emotional, shared with her family," Bilbrey recalled when he told Buck about the job offer.
Buck said she never had her sights set on the corner office. Still, the interest Bilbrey and others before him took in her career reverberates today. Buck has made relationship building and unlocking potential in Hershey's employees a key part of her job. She has spoken with other executives at Hershey whom she believes have C-suite potential.
"People did that with me, and I wouldn't be here today if I didn't have those opportunities, if I didn't have people, advocates for me, who spent the time to really know me and know what I was great at and know where they felt I had potential," Buck said. "That encouragement is a really healthy thing that a leader can do to bring out the best in their people."
Buck downplays the fact that she is the lone female CEO at a major food or beverage company, as well as the first woman to lead Hershey — choosing instead to focus attention on her past successes and the results she has delivered running the confectioner. Buck said she hasn't been "disadvantaged" during her career because she is a woman, but in a business community where females are not heavily represented in upper management, it remains an occasional topic of discussion with other executives.
At Kraft in 2001, Buck was promoted by Denise Morrison, the former Campbell Soup CEO, to general manager, putting her in charge of the company's $1 billion confections division that included Jet-Puffed Marshmallows, Altoids and Lifesavers. As a gift to celebrate the promotion, Morrison purchased Buck a Tiffany bracelet.
"It was kind of like this is a big deal, and it was because I was a woman. 'You are one of the few people and you should feel so good about this,'" Buck recalls Morrison telling her.
A few years later, Buck remembered Daryl Brewster, her boss at Nabisco who had four young daughters of his own, making a point of wanting to help her. "He was like 'I want to help you because someday I want somebody to help my daughters figure out this business in a world that didn't have a lot of women at the top in it,'" Buck said.
A strategy built on tough choices
Few experiences were as instrumental in shaping Buck's career than in the mid-1990s when she was tapped to turn around an underperforming Nabisco refrigerated business. Brewster, then the president of Nabisco's Specialty Foods Company, picked Buck for the job even though her professional experience had been in marketing.
It was a daunting task for even the most seasoned executive, and Buck would have 90 days to come up with a plan and execute it. Before she dug in, Brewster gave Buck some advice.
"I said, 'Look, you got this thing. Run it, not like a marketer, but run it as a general manager, run it as if you run the entire enterprise,'" Brewster said. "We knew where the business was, and we knew we were gonna have to make some choices. I think we all had some thoughts about what we should do. ... And she just came back with a brilliant plan. It required very tough choices, right? This wasn't easy stuff."
While the business included the successful Egg Beaters line, it also had expanded into other areas such as a SnackWell's chocolate yogurt and an Easy Omelette, both of which were touted as major growth pillars for the company. Nabisco spent millions of dollars and invested thousands of hours in developing these and other products, but many of them were "bleeding money," Brewster recalled.
I think it's that triple play that Michele brings to the part: makes the tough choices, amazing innovator, clear and able to really get the leadership skills to pull that together... To me, that's the triad that you want in a great leader.
Buck quickly went about combing through the portfolio to figure out where it made sense to discontinue a brand rather than invest more cash if it were unlikely to ever make money, Brewster said.
She determined the SnackWell's yogurt would likely never be able to compete profitably against industry juggernauts Yoplait or Dannon; Buck proposed closing it down. Other brands were eventually discontinued, too. Buck decided to invest the money saved to freshen up Egg Beaters. It was sold in 1998 to Conagra along with Nabisco's tablespreads business.
The job forced Buck to learn more about manufacturing, polish her leadership skills, delegate responsibilities and figure out solutions, she told The New York Times last year.
"She really worked with the team, came back, pushing harder than we might," Brewster told Food Dive. We "really saw somebody who transformed from an excellent world-class marketer into a total business person."
During the turnaround, Buck worked side-by-side with employees in the manufacturing line and would discuss with them at the end of a shift what wasn't working, why and what changes they were going make. After improvements to the facility's maintenance, employee training and quality inspection, conditions improved.
"It was one of the most rewarding experiences I've had, because I knew I saved those people's jobs," Buck told The New York Times.
Brewster, a former Krispy Kreme CEO who has held executive positions at other companies including Campbell Soup, said Buck was able to turn around the refrigerated business because she was willing to refocus the portfolio on products with a higher chance of success while at the same time keeping her team fully engaged — even if the brands they worked on were the ones being cut.
It also showed Buck's willingness to look beyond the finances and dig deeper into the broader impact her decisions would have on employees. Buck would explain the rationale behind her choices and find new jobs for displaced workers when possible.
When she left the plant after turning it around, Buck got a plaque made by the wife of a union employee in a frame crafted by the shop mechanics that read: "Our Loss is Their Gain."
"I think it's that triple play that Michele brings to the part: makes the tough choices, amazing innovator, clear and able to really get the leadership skills to pull that together," Brewster said. "To me, that's the triad that you want in a great leader."
High stakes gets higher during pandemic
Buck is described by former bosses as a persuasive communicator who has a rare ability to take complex information and distill it into a simple message so employees can remember and follow through. She possesses a passionate curiosity for the job, is praised for her shrewd listening skills and willingness to adapt, and has an ability to juggle the varying responsibilities that come with being a CEO.
Her business experience and intricate knowledge of Hershey enables Buck to participate in multiple facets of the company's operations. She enjoys balancing the strategic requirements of planning long-term strategy and cultivating future leaders with those that are more minute, like delving into analytics or daily operations, she said.
"Of all the jobs I've ever had in my career, this is the one I was most meant to do, that my skill set is most aligned to, which I would not have anticipated," Buck said before adding: "Yes, it's a hard job. And for me, I think the hardest part of the job is the enormous responsibility that I feel for all our stakeholders."
The role has become even more challenging as the coronavirus affects Hershey's business.
After benefiting in March as consumers stocked up at home, Buck told analysts in late April during its earnings call that with millions of people out of work and financial pressures mounting, consumer behaviors were evolving and buying habits were changing. In some cases, when people made a purchase they were trading down to lower price-per-ounce offerings, prompting market share declines in brands such as SkinnyPop and Pirate's Booty.
There were areas of strength in its operations, too. Hershey posted solid results in its e-commerce business, in take-home confections like bags of Kisses and miniatures, and baking ingredients such as chocolate chips, cocoa and syrup.
"The situation continues to evolve so rapidly that it's difficult to predict the future with much certainty," Buck told analysts in April. "The reality is that we have never seen so many factors at play at the same time on such a global scale."
Of all the jobs I've ever had in my career, this is the one I was most meant to do, that my skill set is most aligned to, which I would not have anticipated.
In response to the outbreak, Hershey reallocated savings from canceled events such as March Madness and the Olympics to digital promotions online, as well as toward increased coronavirus-related manufacturing and selling costs. The company also pivoted how it promotes some of its products, such as S'mores where it emphasized family consumption at home versus larger community and friend gatherings.
"Hershey is well served having Michele as a leader right now because it is a point in time of dynamic change and I think one of Michele's strengths is working to understand situations," Wege said. "You want somebody who is more visionary, who is more of a change agent and whose certainly into looking, reacting and adapting to the circumstances."
Buck said while her leadership style hasn't changed because of the outbreak, it required her and other executives at Hershey to not only pay more attention to the pandemic's effect on their business but also how it impacted the "physical, emotional and economic well-being" of its workers.
"The stakes for getting this right were unlike anything I've encountered in making commercial decisions throughout my career. We take risks with a new product or new initiatives and if they don't work, we can learn, adapt and move on," Buck said. "In this environment, the health and well-being of our teammates has been at stake. Doing the right things, learning and continuously adjusting how we operate has been critical."
'A success story'
Even as the food and beverage industry responds to the coronavirus, it hasn't altered the underlying changes taking place before the pandemic began. Shoppers are spending more time on their smartphones and social media, requiring Hershey and others in the space to invest more in data, analytics and technology to reach consumers. People also are eating healthier, snacking more and purchasing a larger portion of their groceries online.
As Hershey expands its reach into other snacking categories, Buck hasn't lost sight of the need for innovation in its sweets that she described as "the profit engine of this company." Hershey, the largest U.S. confections company, owns three out of the top five brands by sales in U.S. confections, with Reese's, Hershey's and Kit Kat.
In recent years, Hershey has introduced new stand-up packaging to improve the shelf appeal of its candies and innovated its core product offerings — debuting Hershey bars with Reese's Pieces; snack mixes containing chocolate, pretzels, popcorn and nuts; Kit Kat Duos coated in mint and dark chocolate; York Peppermint Pattie Thins to cater to the calorie-conscious crowd, and rebranding Buck's favorite candy Take 5 under its Reese's umbrella.
Hershey also has spent more to market some of its other brands that had been starved for attention, including Payday, Rolo, Mounds and Almond Joy.
Buck's ability to maintain Hershey's prominence in confections while moving into other snacking occasions has drawn praise from at least one food manufacturing executive.
"Hershey is in a difficult U.S. market showing some very good solid growth, and they are also increasing their profitability," Dirk Van de Put, CEO of Mondelez International, the maker of Oreo cookies and Cadbury chocolates, told Food Dive. "From my perspective, yeah, it's a success story here. She's done really well."
A key strategy of Buck's shift into other snacking categories is acquisitions. It purchased Amplify, the parent company of popcorn brand SkinnyPop, for $1.6 billion, the largest deal in the company's history. It also acquired Pirate's Booty cheese puffs and protein bar maker One Brands.
The move into other snacks was made easier by the fact that Hershey understood the category and how consumers behaved; many of its existing brands were already competing with these offerings, Buck said. The company also had a close relationship with retailers and a mature distribution network to seamlessly integrate the new products.
"It's about keeping everything that we have that is wonderful [at Hershey] and then how do we take it to the next level because the world is changing more rapidly than ever before. The marketplace is changing. Consumers are changing," she said. "You have to stay ahead of it."
The deals, by and large, have paid off. During the first three months of 2020 before the impact of the coronavirus took hold, salty snack sales in retail jumped 12%, led by a strong performance in SkinnyPop and Pirate's Booty. One Brands also has posted promising results during the short time it's been in Hershey's portfolio.
But in January, the company wrote down the value of its former Krave brand by $108 million after consumers drifted toward mainstream options where growth was more robust and a proliferation of competitors in the premium segment squeezed profit margins. Last month, Hershey jettisoned the brand, selling Krave to a private equity group run by the jerky brand's founder for an undisclosed amount.
Buck, who advocated for the Krave deal five years ago, said despite its challenges, the acquisition provided Hershey with invaluable insights that have shaped its M&A; strategy. Hershey is now targeting $100 million-plus brands with strong margins. Buck wouldn't rule out a deal on the confectionary side, but said Hershey is targeting businesses in the savory and better-for-you snack space where it doesn't have a big presence.
"We use that learning from Krave to kind of alter our approach going forward," Buck said. "We totally sharpened our profile of what companies we were interested in. And that was so valuable for us."
As the popularity of snacking increases, other deep-pocketed players such as Conagra Foods, Kellogg Company, Mondelez and Mars Wrigley have entered the segment or added to their existing portfolio to capture part of that growth — many of them in the same bar, jerky and salty categories as Hershey.
Lash at Morningstar said the "competitive intensity" Hershey faces in snacking isn't going to subside anytime soon. Consumers have more snacking options and a growing number of people are turning to click-and-collect and home delivery in place of trips to the store — efforts that have accelerated since the pandemic took hold.
"That is a challenge and a headwind," Lash said. "That's why it's essential that their products are resonating with evolving consumer trends."
John Boylan, a senior equity analyst with Edward Jones, told Food Dive as competitive pressures increase, Buck has an inherent advantage because of Hershey's name recognition with consumers. Hershey was the seventh most-loved brand in 2019, according to global technology company Morning Consult, joining Amazon, Home Depot, Netflix and Cheerios in the top 10.
"With their brand name and presence being so well known in confectionary, they are starting from a really nice place to be from a competitive standpoint," Boylan said. "The one nice thing is when you have a presence like that, when you do come out with a new product or a new idea, at a minimum, customers are going to listen."
The Sweetest Place on Earth
A visit to Hershey, Pennsylvania in the southeastern part of the state reveals a town that has thrived because of the chocolatier's presence and a willingness to embrace the deep connection it has with the company. A drive into town shows a billboard on the side of the road welcoming people to the "Sweetest Place on Earth." Street lamps have giant Hershey Kisses covering the light bulbs and the roads are adorned with names such as Chocolate Avenue and Cocoa Avenue. Instead of mints, restaurants disperse Hershey Kisses to patrons leaving the establishments.
The Hershey name adorns several buildings in the area, including Hersheypark, Hershey's Chocolate World — a Willy Wonka-like candy store loaded with the company's sweets, snacks and clothing — The Hershey Story museum and the Hershey Trust that operates a K-12 institution free for hundreds of low-income students.
The trust, which exerts significant control over Hershey with more than 80% of the total shareholder vote, has previously opposed sales of the beloved institution, most recently to Mondelez in 2016. This has led to clashes over strategy with prior CEOs, leading to their ouster or resignation. When Buck took over, she was the fourth CEO in the past 12 years.
Hershey, with a population of around 15,000, has rebuffed the infiltration of tall skyscrapers and buildings wrapped in glass that inhabit big cities where other food companies reside. Hershey's headquarters, which tops out at three stories, has white, brown and light gray stones interspersed with long vertical windows that are more reflective of a church than a building for a Fortune 500 company.
Executives live in Hershey or one of the smaller towns nearby. It takes Buck 15 minutes to drive to work. Her youngest daughter attends a local middle school. The small-town atmosphere creates a unique dynamic for Hershey's CEOs, increasing the pressure on them to deliver not only for shareholders but thousands of local residents and businesses that populate the town and depend on the company to make a living.
"When things are going well, it's great, you are a hero, you get the table at all the places, but that town is relying on you. You are the personification of that community in town," Brewster said. "And that's why as you make tough choices, and Michele has made those, you can do it in the anonymity of New York, but these are people you are going to shop next to so that's just another level that most CEOs don't have to deal with. ... You have to literally be on at all times."
Buck, who added the role of chairman to her title last October, said "it feels like just yesterday" when she took over as CEO. If the next few years are similar to her first three, owners of the company's stock promise to be richly rewarded — shares have surged about 20% to $130 since March 2017 when she took over, adding more than $4 billion to Hershey's market cap.
For Bilbrey and others, the financial gains pale in comparison to the growth they have seen in Buck professionally and the job she has done to position Hershey to compete in the cutthroat consumer packaged goods space.
"There is nothing more gratifying for me than to see her succeed. The company's doing well. She's building her team. It's a great story," Bilbrey said. "Businesses can go up and down and all that but I tell you, I have a fairly meaningful [financial] interest in Hershey doing well, and I sleep well at night knowing she's driving the boat."
Buck is "proud" of what Hershey has accomplished under her watch, and downplayed leaving the company anytime soon. Instead, Buck, who enjoys exercising, spending time with her family and relaxing at her self-described "happy place" on the beach when she's not at Hershey, said she is focused on leading the company into its next phase of growth.
"I am so exhilarated every single day, and I'm so fortunate to have this opportunity to lead this great iconic company," she said. "When I look ahead, there is so much more opportunity to go after. We're operating from such a position of strength with where we've gotten to, but then the challenge is okay, now we've got to take it even higher, and I have every confidence that we will be able to do that."