A Sweet Business

Among major U.S. corporations, only Pennsylvania's Hershey Chocolate Corp. still does no national advertising, has no publicity man, and turns out just about what it did when Woodrow Wilson was President. All Hershey makes is chocolate bars, kisses, syrups, powders--and money. Because the great American sweet tooth seems unaffected by economic headaches, Hershey is apparently recession-proof. Last year it increased sales 4% to $177 million and rang up whopping pretax profits of $41 million. Three weeks ago, when Hershey unwrapped plans for a 5-for-1 stock split, its shares jumped 14 points to 196 in a single day's trading; last week, even after profit taking by speculators, they were still selling at 189.

How does Hershey do it? Says Chair man Samuel F. Hinkle, 61, a folksy chemist who rose from plant manager to chief of the nation's biggest candymaker: "Our basic aim is to present the chocolate bar as you knew it in boyhood days. We wouldn't change the flavor for anything. And we try to keep the size as close as possible to the size of 40 years ago."

Gay Blade. In fact, Hershey does play around some with the size of the bar, changing it to counter the wildly gyrating world cocoa market. Since World War II, as cocoa prices have ranged from 8-c- to 74-c- a pound, Hershey's nickel bar has varied in weight between a full ounce and seven-eighths of an ounce, and company executives have learned to swallow such gibes as "Hershey is packaging a nice razor blade now." Recently, when cocoa prices tumbled below 30-c-, the bar was raised back to a full ounce. Hershey jiggers with weight instead of price because its nickel bars have always vastly outsold its dime bars; they also outsell any competing nickel candy bar of any kind or shape by at least 2 to 1.

Just as it dominates the U.S. chocolate market, the Hershey Corp.--and the ever-present sweet scent of its products--dominates the town of Hershey, in the undulating Pennsylvania Dutch country. Town and company alike were confected by patriarchal Milton S. Hershey, an ambitious farmboy who learned to make taffies that he called "French Secrets," went broke in three candy businesses before he built Hershey Chocolate in 1903 on the cornfields surrounding the house in which he was born. Exploiting a turn-of-the-century switch in U.S. tastes from other candies to chocolate, Milton Hershey put out a bar that quickly cornered the market and, in the absence of competition, needed no advertising. Ever since, Hershey's greatest strength has been the fact that for most Americans "Hershey bar" and "chocolate" are synonymous.

Before long, Milton Hershey was a multimillionaire who could boast, "I have made all the money I need; what I want to do is put it to work so that it will benefit others." By the time he died at 88 in 1945, Hershey had built most of the town of Hershey and turned it over to his estate for use by the town's 6,000 residents. Among his gifts: a $3,000,000 community house, a junior college, three schools, two country clubs, four golf courses, an amusement park, two swimming pools, an ice rink, a hotel, stadium, zoo and firehouse. Childless himself, Hershey founded the Milton Hershey School for orphan boys and gave his stock to it. Through trust funds, the school now owns 70% of Hershey Chocolate's 2,400,000 outstanding shares.

The Test of Quality. Despite such paternalism, Hershey has had its full quota of labor trouble. A sitdown strike in 1937 set off a head-cracking battle between union and nonunion employees; in another bitter strike in 1953, the union was defeated in its demand for a closed shop. But since then, says the local agent of the A.F.L.-C.I.O. Bakery and Confectionery Workers, "our relationship has been progressively better."

To critics who cry "company town," Hershey executives reply that Milton Hershey's creation--with its broad green lawns, absence of slums, and sports events sponsored by the Hershey estate--"may well be the best town in America for raising kids." And to candy fanciers who do not find Hershey's chocolate quite as tasty as the costlier Swiss and Dutch imports. Chairman Hinkle has a businessman's answer: "In one sense, the best chocolate is the chocolate that sells best."

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