---
title: "Hershey's Deep Adjustment: Uncertain Future as Products Pulled from Supermarkets During Peak Season and Employees Unhappy with Compensation"
description: "During the Spring Festival peak season for candy and chocolate sales, Hershey's products have been pulled from many supermarkets while the company focuses on adjusting its sales channels and laying off employees. The adjustment, which includes handing over operations to a distributor, has led to employee dissatisfaction over compensation disparities and raised concerns about the brand's future in China."
author: "李振兴"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2021-01-23"
language: "en"
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# Hershey's Deep Adjustment: Uncertain Future as Products Pulled from Supermarkets During Peak Season and Employees Unhappy with Compensation

> During the Spring Festival peak season for candy and chocolate sales, Hershey's products have been pulled from many supermarkets while the company focuses on adjusting its sales channels and laying off employees. The adjustment, which includes handing over operations to a distributor, has led to employee dissatisfaction over compensation disparities and raised concerns about the brand's future in China.

**If they won't even make a push during the Spring Festival peak season, it's unlikely they'll invest much at other times.**
Spring Festival is the peak season for candy and chocolate sales. Mars' Dove chocolate displays are appearing in major supermarkets, and Ferrero's "Italian daughter-in-law" ads are back on multiple TV channels. **But another giant, Hershey, has had its products pulled from many supermarkets and is busy figuring out how to terminate employee contracts.**
Recently, a Blue Whale Finance reporter found that at Beijing Yonghui Superstores, Wumart Stores, and some convenience stores, Hershey's product shelves have been taken over by other brands, or products are sold out and not restocked.
In response, Hershey told Blue Whale Finance that it is adjusting its distribution channels, that the adjustment will not affect sales of its products on current platform channels, and that it is finalizing details on optimizing its sales channel model in China.
In fact, Hershey began adjustments as early as November 2020, handing over operations in the Chinese market to a distributor and streamlining its workforce.
However, according to insiders, Hershey's workforce reduction has not gone smoothly. Due to significant differences in compensation packages, employees who have served Hershey for many years are dissatisfied with the current handling and have not signed the termination agreements.
Industry insiders believe that distributors and brand operators have different mindsets; distributors demand higher profits, so they cut unprofitable channels and streamline staff. But Hershey's adjustment during the peak season indicates the urgency of its changes. In the future, Hershey may increase focus on online, group-buying channels, and wedding candy scenarios. **However, with limited consumption scenarios for candy and chocolate, declining sales, and lingering employee dissatisfaction, Hershey's adjustment faces an uncertain future.**
**-01-**
**Products Pulled During Peak Season**
**Hershey's Adjustment Takes Effect**
A Blue Whale Finance reporter surveyed several supermarkets and found that Hershey's shelves at Yonghui Superstores have been taken over by Mondelez products. Some stores only have the classic KISSES products on sale, while the locally launched "sweet, sour, bitter, spicy" products are no longer sold.
A Yonghui store manager told Blue Whale Finance: "These are all the Hershey products we have now; we don't know when we'll restock."
At Wumart Stores, Hershey's product boxes are empty, with electronic price tags showing "Temporarily out of stock, please understand." But a salesperson told Blue Whale Finance: "There's a string of numbers under the label, and the last digit is '8,' which means this product won't be restocked."
An insider told Blue Whale Finance that currently only Walmart's supply is normal; other supermarkets have issues to varying degrees.
In response to these market conditions, a Hershey spokesperson told Blue Whale Finance: "Chinese consumers can rest assured that Hershey's sales channel adjustment will not affect sales of Hershey products on current platform channels; consumers can still order and enjoy them through various channels. Hershey is finalizing details on optimizing its sales channel model in China."
Currently, Hershey products are selling normally on online platforms such as Tmall and JD.com.
According to Zhu Danpeng, a Chinese food industry analyst, when a distributor takes over Hershey's China market, it will reposition all channels. The positioning for hypermarkets will be high cost and low sales, so Hershey is pulling out of large supermarkets. This is also the beginning of Hershey's retreat from China. "If they won't even make a push during the Spring Festival peak season, it's unlikely they'll invest much at other times."
**-02-**
**Unequal Pay for Equal Work**
**Employee Contract Terminations Hit Snags**
In fact, as early as early November 2020, insiders revealed that Hershey had stopped funding some hypermarkets. At that time, Hershey did not directly respond to whether it had stopped investment, telling Blue Whale Finance: "Hershey will continue to invest in important channels, including hypermarkets."
But by the end of November last year, Hershey began its adjustment, handing over operations in the Chinese market to a distributor and streamlining its distributor team and employees.
However, Hershey encountered difficulties in streamlining employees. Many third-party employees do not agree with the current compensation agreement. Blue Whale Finance exclusively learned that Hershey's operations team consists of two parts. One part is employees contracted with Hershey, responsible for distributor management. Another group of so-called third-party personnel is responsible for store management, displays, and communication with stores.
Hershey has two third-party operators nationwide: Shanghai Yingdi Marketing Services Co., Ltd. (hereinafter "Shanghai Yingdi") and Shanghai Aoweisi Marketing Services Co., Ltd. (hereinafter "Shanghai Aoweisi").
Hershey's own employees and third-party employees have different compensation plans. The aforementioned insider revealed that Hershey's own employees receive a compensation package of N+1+2, where N is years of service, with Hershey paying N months' salary as compensation. "1" is the employee's current month's salary, and "2" is twice the employee's average monthly salary. Additionally, there is a signing bonus of N×X, where X is 1,000 yuan, 2,000 yuan, or 2,500 yuan depending on years of service.
However, third-party workers only receive N+1+1 compensation.
Regarding this compensation plan, an employee contracted with Shanghai Yingdi told Blue Whale Finance: "Having worked at Hershey for the same five or six years, others earn more than 20,000 yuan more; it really stings."
Another worker from Shanghai Aoweisi said: "We're all on the front lines, putting in effort for Hershey, but we don't get equal treatment, so we're angry."
Notably, many of these employees were once Hershey employees. According to reports, when Hershey acquired Golden Monkey in 2016, the workforce surged, and Hershey persuaded some employees to sign labor contracts with third parties, promising equal treatment. But after the change in labor relations, although these employees' salaries remained the same, benefits such as physical exams and holiday perks promised to those who switched contracts were not fulfilled. At the most critical moment of signing termination agreements, there is even greater differential treatment.
Hershey told Blue Whale Finance: "Regarding employees who may be affected by this adjustment in sales channels and service methods, Hershey has always acted in accordance with Hershey values, treating every employee fairly, and strictly complying with Chinese government laws, regulations, and company policies throughout the process to protect employees' legitimate rights and interests. Currently, Hershey keeps specific matters concerning its employees confidential, so we cannot provide more details."
According to reports, there are about 400 third-party workers, while only about 200 are contracted directly with Hershey.
**-03-**
**Adjustment in Deep Water**
**Can It Navigate the Reefs?**
In addition to the conflict between employees and the company over compensation, Hershey's adjustment in deep water faces many unpredictable difficulties.
Yao Liming, director of the China Commercial Economic Research Center, believes that Hershey's market promotion model has always been vertical and diffuse distribution, where the company directly develops distributors in various regions to ship goods. Now, because this model has too many loopholes in the middle links and is difficult to manage, if a distributor in one region has problems, it affects the company's overall image and interests. Therefore, it needs to change to a market general agent model. The former is suitable for quickly opening the market in the early stage but is hard to manage and can easily mess up the market in the long run. The latter expands the market slowly and is easily controlled by agents.
A person close to Hershey told Blue Whale Finance that Hershey may replace agents nationwide, and is currently in the handover process; cooperation may resume after the handover. Moreover, a person with years of experience in the FMCG industry told Blue Whale Finance: "Hershey hasn't done well in the Chinese market."
Online may be Hershey's future focus. Hershey stated that it remains focused on implementing three major strategies: vigorously expanding e-commerce channels, focusing on the chocolate category, and continuously innovating to meet Chinese market demand.
Mintel analysis reports show that for chocolate brands, combining e-commerce with offline retail is an excellent strategy. While consumers are exposed to a wide range of options through online stores, they lack real shopping experiences and genuine interaction with products. Offline retail provides consumers with customized services and builds a communication bridge between consumers and brands.
In 2019, Hershey opened its first offline dessert concept store in Shanghai to explore the diversity of offline retail.
Zhu Danpeng believes that in addition to increasing focus on new retail, Hershey will also strengthen wholesale distribution channels and special channels like group buying, and expand in the wedding candy scene.
However, Hershey's increased focus on e-commerce and chocolate may face considerable resistance. Mintel data from February 2020 shows that only 73% of surveyed consumers had bought candy or chocolate in the past 12 months, lower than those who bought dairy products, nuts, fresh fruit, and baked goods. 37% of people increased their spending on chocolate in the past 12 months, while 14% decreased it, ranking third after alcohol and tobacco in terms of decline.
A Mintel analyst believes that respondents prefer to give chocolate and candy gifts on Valentine's Day and Christmas. Candy brands need to break this boundary and explore more consumption occasions. Collaborating with snacks, desserts, and even non-food and beverage categories can help enhance the fun of consumption experiences and expand brand customer bases.
Source: Blue Whale Finance, Author: Li Zhenxing
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