The North America segment is responsible for our chocolate and non-chocolate confectionery market position, as well as our grocery and growing snacks market positions, in the United States and Canada. This includes developing and growing our business in chocolate and
The North America segment is responsible for our chocolate and non-chocolate confectionery market position, as well as our grocery and growing snacks market positions, in the United States and Canada. This includes developing and growing our business in chocolate and non-chocolate confectionery, pantry, food service and other snacking product lines. North America accounted for 88.1%, 87.8% and 87.6% of our net sales in 2017, 2016 and 2015, respectively. North America results for the years ended December 31, 2017, 2016 and 2015 were as follows:
For the years ended December 31,
2017 vs 2016
2016 vs 2015
In millions of dollars
2017 compared with 2016
Net sales of our North America segment increased $88.2 million or 1.3% in 2017 compared to 2016, driven by increased volume of 0.5% due to a longer Easter season, as well as 2017 innovation, specifically, Hershey's Cookie Layer Crunch, and the launch of Hershey's Gold and Hershey's and Reese's Popped Snack Mix and Chocolate Dipped Pretzels. Additionally, the barkTHINS brand acquisition contributed 0.3%. Net price realization increased by 0.4% due to decreased levels of trade promotional spending. Excluding the favorable impact of foreign currency exchange rates of 0.1%, the net sales of our North America segment increased by approximately 1.2%.
Our North America segment income increased $4.6 million or 0.2% in 2017 compared to 2016, driven by higher gross profit, partially offset by investments in greater levels of advertising expense and go-to-market capabilities, as well as unfavorable manufacturing variances and higher freight and warehousing costs.
Hershey says revenues were higher because Easter was later in the year. Should Hershey's accountants have been able to forecast this?
No. Easter occurs different times each year and no one can know when it will pop up each year.
No. Accountants are not fortune-tellers and cannot forecast what will happen to sales.
No. Accountants should just forecast the same level of sales each yea.
Yes. We can use a calendar and count the days between Valentine's Day and Easter know there is a longer selling season and forecast additional sales.
The costs and revenues related to the launch of new products, “Hershey’s Gold” and “Popped Snack Mix (Hershey’s and Reese’s)” should have been included in the budget for Hershey.
False. Marketing likes to keep new products secret, so accountants would have had no way of knowing that new products would be forthcoming.
False. Management probably just decided to launch new products without telling anyone, so accountants could not have included costs and revenues.
True. Launching new products takes a lot of preparation and the accountants should have had forecast for cost and sales of the new products.
False. New products are not included in the budget since they are new.
The acquisition costs and projected revenues of the barkThins brand should have been included in the budget.
True. Every business that Hershey would purchase would have the same costs/revenues and accountants should just include a purchase each year just in case.
True. Purchasing a business would have required years of planning and executives would want everyone involved so that competitors would help to up the purchase price.
True. barkThins would contact Hershey accountants to make sure the purchase was budgeted.
False. Purchasing a business probably would not be discussed openly with personnel to keep the purchase confidential until it is completed.
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