M&A

Hershey mum on rumor of selling Chinese candy brand to COFCO

By Douglas Yu contact

- Last updated on GMT

Hershey acquired Golden Monkey in 2014. Pic: ©GettyImages/gsheldon
Hershey acquired Golden Monkey in 2014. Pic: ©GettyImages/gsheldon
Hershey is rumored to be selling Golden Monkey to China’s state-owned food processing company COFCO as early as next month, but it has declined to comment on the speculation.

Hershey decided to acquire 80% share​ of the Shanghai-based confectionery brand in late 2013 for $394m, and completed the deal the following year.

Even though the company originally attempted to expand its distribution networks in China and improve its regional performance through the acquisition, its sales in China fell for several quarters afterwards.

According to Chinese confectionery trade body, China Candy, Hershey has been downsizing the production of various Golden Monkey brands, and laying off its employees by using different “compensation plans” ​since 2016 – the same year when it swallowed the remaining 20% stake​ in Golden Monkey for about $98m.

Golden Monkey manufactures its products out of several locations in China including Shanghai, Xianyang (Shaanxi Province) and eastern Henan Province. However, some of the assets in these factories were sold by Hershey in March, 2018, noted China Candy.

COFCO, which sold another Chinese chocolate brand Le Conte to Hollygee​ in late 2016, did not immediately comment on the potential deal.

What baffles the domestic candy industry is COFCO’s purchase intention since Le Conte is higher in value as a brand compared to Golden Monkey.

However, China Candy said COFCO had sent a third-party firm to evaluate Golden Monkey’s business before the Lunar New Year in 2018, and it was “deeply impressed.”

Remain committed to China

Jeff Beckman, Hershey’s spokesperson, said: “We remained committed to the growth opportunities and market potential for our business in China.

“We have long-term vision for China, and we are evolving our business with a clear strategy to drive sustainable, profitable growth in the future by resetting our business to respond to the changes in the market.”

He added, “we are undertaking a number of exciting new products, packaging and marketing initiatives to drive ‘disruptive growth’ in a new era of chocolate growth in China.

Additionally, “Hershey China is focusing on e-commerce and product innovation. As we focus our efforts and resources on these areas, we are confident that we will bring more fun and enjoyable moments to consumers in China,”​ said Beckman.

Hershey’s latest financial results showed its net sales in China grew 0.9% in Q1 2018.

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