The Hershey Company and Lotte Announce China Joint Venture

30/01/07 The Hershey Company, North America's leading chocolate and confectionery manufacturer, and Lotte Confectionery Co., LTD., Korea's leading confectionery and ice cream manufacturer, announced a manufacturing joint venture in China that will produce Hershey and Lotte products for the market in China. The manufacturing agreement is part of a strategic alliance that enables the companies to explore opportunities for marketing and distribution of products in Asia and the United States.

The manufacturing facility, located in Jinshan, near Shanghai, will make a variety of Hershey's, Hershey's Kisses and Reese's products. The facility will enable Hershey to expand its business within China. The alliance also will be the source of products as Hershey increases its presence in high-potential Asian markets, including Korea, Japan, Taiwan, the Philippines and other markets.

In addition, Lotte and Hershey will cooperate to distribute Hershey's products in Korea and Japan. The companies will continue to expand their relationship by leveraging the key regional strengths of both companies.

"Our strategic alliance with Lotte gives Hershey immediate manufacturing scale and expertise in China, an important global growth market for our company," said J.P. Bilbrey, Senior Vice President, President International Commercial Group, The Hershey Company. "We know our brands appeal to Chinese consumers, and we are taking a significant step in building the supply chain capabilities to bring our products to market. Working with Lotte, we'll be able to produce affordable products in the right flavors and formats for the local Chinese market, as well as regional Asian markets. The manufacturing facility in Jinshan also gives us the flexibility to make products closer to our consumers, bringing locally relevant and innovative new products to markets faster and fresher."

The Jinshan manufacturing facility is expected to be in operation by June 2007, with products available in retail locations in China by this August.

As part of the agreement, Hershey will provide Lotte with expertise and distribution capabilities in the United States. The Hershey Company will help test and distribute Lotte's successful Xylitol gum and a variety of other refreshment products.

Terms of the joint venture were not disclosed. The agreement is subject to normal closing requirements.