The disappearing middle class is threatening American mega brands

Tuesday, November 3, 2015
By Paul Martin

Hayley Peterson
BusinessInsider.com
Oct. 29, 2015

The disappearing middle class is challenging many major American brands.

The Hershey Company on Wednesday reported flat sales for the most recent quarter and cut its profit outlook for the year.

Company executives blamed the disappointing results in part on the changing income landscape in the US.

“We think that consumer bifurcation has been an important driver,” Hershey CEO John Bilbrey said on an earnings call, referring to the growing gap between upper-income and lower-income consumers.

Upper-income consumers are buying more premium treats, while lower-income individuals are purchasing discounted chocolates, he said. Hershey’s has been losing market share, as a result.

“While overall consumer confidence is trending up, lower income consumers continue to be fragile as income and wage growth has been minimal,” he said. “Higher income and more confident consumers are driving premium growth, while cost-conscious consumers are driving the value segment.”

Hershey’s is hoping that its acquisition of the Canadian company Allan Candy will help it compete for lower-income consumers, Bilbrey said. The company is also ramping up its premium offerings.

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