Mars fights to knock off Hershey as America’s chocolate king

ELIZABETHTOWN, Pa. — This stretch of rolling dairy country has long been Milton Hershey’s turf, where he first found success making chocolate more than a century ago and earned a name synonymous with chocolate in America.

But M&M-making rival Mars has crept up on Hershey’s dominance of U.S. chocolate buyers. And now, Mars has delivered a chocolate-coated slap in the face, setting up shop in south-central Pennsylvania, just 10 miles from Hershey’s flagship factory on Chocolate Avenue.

The $70 million Dove Chocolate Center of Excellence is the latest sign that the spotlight-shy Mars is breaking out of its shell as it tries to pound cracks into the long-held notion that Hershey is the real American chocolate company.

While Mars makes its surprisingly sharp-tongued attack, Hershey has struggled to cut costs by closing U.S. plants and blending cocoa butter substitutes into some of its chocolate candy — a step that has riled candy enthusiasts who say it dulls the flavor and feel of pure chocolate.

At the unveiling of its newly expanded Dove factory in late September, Mars Snackfood U.S. president Todd Lachman said — without naming Hershey — that cost-cutting competitors are “tricking” consumers with substitutes and outsourcing American jobs.

“The consumer is our compass, and we will always deliver 100 percent real, authentic chocolate products that have been manufactured here in the United States,” Lachman said.

Mars also has pivoted its PR messages to chide its rival: Its premium brand Dove is “Made in the USA” and Mars can be trusted “to provide pure, rich chocolate,” it says. And Mars is making its case just as it’s leapfrogging Hershey as America’s largest candymaker, with its $23 billion purchase of mint and chewing-gum giant Wm. Wrigley Jr. Co.

Meanwhile, Hershey is closing six plants — three in Canada and one each in California, Connecticut and Pennsylvania — in a move to cut costs and compete in faster-growing and cheaper regions. All told, Hershey is cutting about 3,000 U.S. jobs and expanding its operations in Mexico, India, China and Brazil.

While Mars will still lag Hershey’s prized top spot in the U.S. chocolate market — which totals $16 billion — analysts agree that Hershey is facing a serious challenge.

Together, Hershey and Mars control better than two-thirds of the U.S. chocolate market, the world’s largest. But Hershey’s edge — currently about 42.5 percent to Mars’ 30 percent, according to IRI/Neilsen data provided to Hershey — has slipped several percentage points in the last couple years as Mars has outmarketed and outmaneuvered Hershey, analysts say.

“I think that Mars sees a weakness and anyone who can get ahead in this economy is going to get ahead, even the secretive Mars,” said Marcia Mogelonsky, a senior analyst with Chicago-based market research firm Mintel International Group Ltd.

Hershey defended itself by saying its plant closings are part of broader changes to ensure its long-term competitiveness. The company also said consumer taste-testers approved of the substitutes for cocoa butter, such as sunflower oil and palm oil. In Mr. Goodbar, for instance, the change lets the peanut flavor shine through, Hershey spokesman Kirk Saville said.

Besides, Hershey maintains that 85 percent of its chocolate lineup is pure, including popular items like Hershey’s bars, Kisses and Reese’s peanut butter cups. Even with a cocoa butter substitute, a Mr. Goodbar has more chocolate by percentage weight than Mars’ Snickers bar, Saville said, and a Krackel has more than a Mars-made Three Musketeers.

“Hershey is chocolate,” Saville said. “We’ve made the world’s best chocolate for more than 100 years.”

Hershey would not provide a list of the products in which it uses a substitute. But under the federal government’s rules for food standards, Hershey cannot call those products “chocolate,” and a keen eye can scan the packaging and ingredients list and figure it out, candy bar by candy bar.

On the packaging, Hershey dances around the term — Whatchamacallit has a “chocolatey coating,” Mr. Goodbar is “made with chocolate” and Kissables are “chocolate candy.”

And sometimes ingredients speak for themselves: Products with the substitutes don’t taste fresh and vibrant, said Cybele May of Los Angeles, who reviews sweets at

“The wonderful thing about cocoa butter is that it melts in your mouth,” May said. “Oils replicate that behavior, but they never get it right.”

Given health scares and concerns about food quality — Chinese milk anyone? — it can be an effective marketing tactic for Mars to cast doubt on its rival’s product, said Jean-Pierre Dube, a marketing professor at the University of Chicago Graduate School of Business. And with both companies strapped by the skyrocketing cost of commodities such as cocoa and milk, Mars’ knocks on Hershey’s quality might persuade consumers to pay a higher price for a Mars product, Dube said.

Whether Mars’ criticism is fair is another question.

Hershey is not alone in using chocolate substitutes: Mars does it in countries where the rules are different. Other candymakers, including Nestle, do not use real chocolate in some of their U.S. candy.

And Mars is doing its own cost-cutting — by slimming down some of its package sizes.

Fair or not, Laurel Haring’s mind is made up.

Once a daily devotee to Hershey’s Kissables, Haring noticed this year that the candies had stopped tasting like, well, chocolate.

“It wasn’t creamy, it wasn’t sweet, it wasn’t milky,” said Haring, 47. “It was just nasty.”

Haring’s husband prowled drugstores and grocery stores near their home in Wilmington, Del., in search of the good Kissables, and came up empty. She even contacted Hershey to tell them something was wrong — and got coupons instead of an explanation.

A few weeks ago, she stumbled onto an online news item about Hershey’s use of substitutes — it featured an image of Kissables — but by then she had moved on.

To Dove Promise squares.

Talk to us

More in Herald Business Journal

Members of Gravitics' team and U.S. Rep. Rick Larsen stand in front of a mockup of a space module interior on Thursday, August 17, 2023 at Gravitics' Marysville facility. Left to right: Mark Tiner, government affairs representative; Jiral Shah, business development; U.S. Rep. Rick Larsen; Mike DeRosa, marketing; Scott Macklin, lead engineer. (Gravitics.)
Marysville startup prepares for space — the financial frontier

Gravitics is building space station module prototypes to one day house space travelers and researchers.

Orca Mobility designer Mike Lowell, left, and CEO Bill Messing at their office on Wednesday, Aug. 16, 2023 in Granite Falls, Washington. (Olivia Vanni / The Herald)
Could a Granite Falls startup’s three-wheeler revolutionize delivery?

Orca Mobility’s battery-powered, three-wheel truck is built on a motorcycle frame. Now, they aim to make it self-driving.

Catherine Robinweiler leads the class during a lab session at Edmonds College on April 29, 2021. (Kevin Clark / The Herald)
Grant aids apprenticeship program in Mukilteo and elsewhere

A $5.6 million U.S. Department of Labor grant will boost apprenticeships for special education teachers and nurses.

Peoples Bank is placing piggy banks with $30 around Washington starting Aug. 1.
(Peoples Bank)
Peoples Bank grant program seeks proposals from nonprofits

Peoples Bank offers up to $35,000 in Impact Grants aimed at helping communities. Applications due Sept. 15.

Workers build the first all-electric commuter plane, the Eviation Alice, at Eviation's plant on Wednesday, Sept. 8, 2021 in Arlington, Washington.  (Andy Bronson / The Herald)
Arlington’s Eviation selects Seattle firm to configure production plane

TLG Aerospace chosen to configure Eviation Aircraft’s all-electric commuter plane for mass production.

Jim Simpson leans on Blue Ray III, one of his designs, in his shop on Friday, August 25, 2023, in Clinton, Washington. (Ryan Berry / The Herald)
Whidbey Island master mechanic building dream car from “Speed Racer”

Jim Simpson, 68, of Clinton, is using his knowledge of sports cars to assemble his own Mach Five.

Yansi De La Cruz molds a cheese mixture into bone shapes at Himalayan Dog Chew on Thursday, Sept. 21, 2023 in Arlington, Washington. (Olivia Vanni / The Herald)
Give a dog a bone? How about a hard cheese chew from Arlington instead!

Launched from a kitchen table in 2003, Himalayan Pet Supply now employs 160 workers at its new Arlington factory.

Inside the new Boeing 737 simulator at Simulation Flight in Mukilteo, Washington on Wednesday, Sept. 20, 2023. (Annie Barker / The Herald)
New Boeing 737 simulator takes ‘flight’ in Mukilteo

Pilots can test their flying skills or up their game at Simulation Flight in Mukilteo.

An Amazon worker transfers and organizes items at the new PAE2 Amazon Fulfillment Center on Thursday, Sept. 14, 2023, in Arlington, Washington. (Ryan Berry / The Herald)
Amazon cuts ribbon on colossal $355M fulfillment center in Arlington

At 2.8 million square feet, the facility is the largest of its kind in Washington. It can hold 40 million “units” of inventory.

A computer rendering of the North Creek Commerce Center industrial park in development at 18712 Bothell-Everett Highway. (Kidder Mathews)
Developer breaks ground on new Bothell industrial park

The North Creek Commerce Center on Bothell Everett Highway will provide warehouse and office space in three buildings.

Dan Bates / The Herald
Funko president, Brian Mariotti is excited about the growth that has led his company to need a 62,000 square foot facility in Lynnwood.
Photo Taken: 102312
Former Funko CEO resigns from the Everett company

Brian Mariotti resigned Sept. 1, six weeks after announcing he was taking a six-month sabbatical from the company.

Cash is used for a purchase at Molly Moon's Ice Cream in Edmonds, Washington on Wednesday, Aug. 30, 2023. (Annie Barker / The Herald)
Paper or plastic? Snohomish County may require businesses to take cash

County Council member Nate Nehring proposed an ordinance to ban cashless sales under $200. He hopes cities will follow suit.