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ELIZABETHTOWN, Pa. This stretch of rolling dairy country has long been Milton Hershey's turf, where he 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.
While Mars makes its mark with the $70million “Dove Chocolate Center of Excellence,” 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. 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.
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.”
On the packaging, Hershey dances around the term — Whatchamacallit has a “chocolatey coating,” Mr. Goodbar is “made with chocolate” and Kissables are “chocolate candy.”
Products with the substitutes don't taste fresh and vibrant, said Cybele May of Los Angeles, who reviews sweets at www.candyblog.net.
“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.”
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 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 but by then she had moved on – to Dove Promise squares.
