American confectionery brand Hershey Co. plans to cut 15% of its global workforce over the next two years, namely in China, as part of its new leadership’s effort to boost profitability.
The Pennsylvania chocolate maker has seen an overall sales stagnation in recent years, as consumers’ eating habits become increasingly healthy at home, while abroad, emerging markets such as China are taking a dive on slower-than-expected economic growth.
According to Hershey, some 2,700 job cuts will take place. The posts, mostly hourly employees outside the U.S., will help the company reach an adjusted operating profit margin of up to 23% by the end of 2019, compared with 20% in 2016. Hershey counted some 16,300 full-time and 1,680 part-time employees globally at the end of last year.
Industry experts believe most of the layoffs will take place in China. Hershey acquired Chinese candy company, Shanghai Golden Monkey (SGM), in 2014. The acquisition came just as China’s economy slowed correlating with the entry of Hershey rivals into the country, such as Mars and Ferrero, who jointly own half the Chinese confectionery market. These were factors, which saw the Chinese market dive for the American group last quarter.
In its fourth-quarter report released in February, Hershey said North American sales, which account for 85% of total sales, rose 3.2%, but sales in China declined 16.6%
In other news, Hershey has named Mary Beth West as it Chief Growth Officer, effective immediately. Reporting to Hershey chief executive West will take charge of the company’s growth strategy, will oversee insights and analytics, mergers and acquisitions, and the Hershey Experience.