Reese’s or Reese’s Peanut Butter Cups are the widely loved confectionery that comprises a chocolate cup filled with peanut butter, hence the name. H. B. Reese’s peanut butter cups, named after the owner, were created in 1928 and were an immediate success. This creation of Reese’s transformed his life and made this candy into the brand it is today. Let’s see Who owns Reese’s?
Reese’s is currently owned and marketed by The Hershey Company and is thriving owing to the many variations introduced and the expansion of Reese’s brand. Coincidentally, H. B. Reese was an employee at Hershey’s before he started his own candy business. Reese left his job at Hershey’s, and eventually, The Hershey Company bought Reese’s from his sons. As of today, Reese’s is a very successful business. Generating annual sales worth more than $2 billion, Reese’s Peanut Butter Cups are on the top of the list of most sold candy brands.
Origin Story
The history of Reese’s will always be incomplete if we don’t factor in what led H. B. Reese into founding the company. Born on May 24, 1879, in a farming family in Pennsylvania, Reese married at 21 in 1900 and had sixteen children. Given his growing family, he worked multiple jobs but somehow struggled to make ends meet. Among a list of these jobs were those of a factory worker and a butcher. But he decided to work at a dairy farm in 1917 that changed his life and the nation’s confectionery scenario.
Reese saw an advertisement and went on to work for Milton S. Hershey on a dairy farm in Hershey, Pennsylvania. Milton S. Hershey was none other than the owner of the Hershey Chocolate Company. He went to work on that farm for many years and then continued his employment in the company’s chocolate factory. Reese was inspired after working in a chocolate factory that he went ahead to start his chocolate brand.
While Reese set out to create something new, it was never supposed to be a big venture. Reese had initially planned to make new chocolate as another means to support his family. Reese’s basement became the place where he created new candies, using Hershey’s chocolate if needed. He named different confectioneries after his children.
Initial Success
By the 1920s, the business had taken off and had exceeded expectations. Since the local market was very receptive to his candy, Reese took it to the next level and founded the H.B. Reese Candy Company. But the signature of the company, i.e. the peanut butter cups, was not made till 1928. Called “penny cups” at the time, these cups were sold for a penny and became an instant hit. Business boomed as other sellers in the market bought five-pound boxes of the penny cups to sell in their own shops.
Since the business was doing well, Reese was able to devote his time entirely to it and quit his job at the chocolate factory. Since he had decided to go all-in, he went on to build a hundred thousand square foot factory for manufacturing confectionery. Located on Chocolate Avenue in Pennsylvania, this factory stayed true to the name of its location and became the birthplace of a wide variety of candy and chocolates that included chocolate-covered dates as well as raisin clusters.
While Reese’s creative streak would have borne fruit to many new items, World War II put those on hold due to scarcity of supplies. Since the economy suffered during the second world war, Reese diverted his attention from inventing new candies and focussed solely on the products that were his best sellers. Other products, while popular, were not as popular as the peanut butter cup and were eventually discontinued. This decision was a wise one and his foresight led to profit.
The Next Phase and New Variations
When Reese’s peanut butter cups were quickly and firmly making a place in the hearts of people, on May 16, 1956, their creator unexpectedly died of a heart attack. His business went to his six sons, namely, Charles Richard, Ed, John, Ralph, Harry, and Robert Reese. They managed it independently for seven years up until July 2, 1963, when a tax-free stock-for-stock merger was announced between the Hershey Chocolate Corporation and H.B. Reese Candy Company.
After the merger, many variations were introduced to the peanut butter cup admirers, changing the coating or the filling of the cups, expanding the size range in which they are offered, and also introducing products specific to an event or a holiday season. The allure for the original peanut butter cups has not decreased but all these variations have successfully expanded the portfolio of the company.
The first of such variations was introduced as “Reese’s Crunchy” in 1976, more than a decade after the Reese’s-Hershey merger. This new crunchy variation of the peanut butter cup was a simple one as it had a filling of crunchy peanut butter inside the chocolate coating, unlike the smooth peanut butter. While it was a different yet somewhat simple variation, it nevertheless was a revolutionary one as it opened the gates for the company to keep experimenting with new variations.
These variations continued and were well received by the customers. Some of the initially offered variations included the Reese’s Peanut Butter Cup in King Size, launched in 1987. Reese’s Peanut Butter Pumpkins was launched on a national scale in 1993. Hershey added a seasonal brand variation to Reese’s peanut butter cups with the national launch of Reese’s peanut butter hearts in 1997, and a sugar-free variation of their confectionary was launched in March 2003, simply called the Reese’s Sugar-Free Peanut Butter Cups. Needless to say, these variations worked. And so much so that they are in circulation today amongst various other brand variations launched by Hershey thereafter.
Today’s Scenario
The tax-free stock-for-stock merger in 1963 between the H.B. Reese Candy Company and The Hershey’s Chocolate Company translated to a $23.5 million purchase. In this deal, Reese’s sons got approximately a 5% share in the Hershey Company. This 5% share today amounts to a billion dollars as Hershey’s current net worth is about twenty billion dollars. These shares are more than likely to increase in value as both Reese’s and Hershey’s are doing a profitable candy business.
Just after six years of the Reese’s-Hershey merger, Reese’s peanut butter cups had gone on to become the top-selling item of the Hershey Company in 1969. This streak of success and popularity continued and in 2012, Reese’s was the best-selling candy not only of the Hershey company but also in the United States. It had a record sale worth $2.603 billion. In the same year, Reese’s was also the fourth best-selling confectionery brand around the globe and the sales amounted to $2.679 billion. If you note the figure within the United States and globally, you would note that only $76 million or 2.8% of the sales in the global figure were made internationally, the rest was all in the origin country. These figures get even more outstanding if we factor in the fact in the United States, H.B. Reese Candy Company manufactures KitKat. In 2012, KitKat recorded national sales amounting to $948 million.
Reese’s remained on top of its name in 2017 as well. If we go by reports of October 2017, Reese’s was the largest confectionery brand in the U.S. convenience store channel. More households were opting for Reese’s candies than those of any other brand. Reese’s had by then widely expanded its offered confectionery items. The top-selling confectionery items nevertheless included the King Size Reese’s Peanut Butter Cups along with over 20 other confectionery items that were not necessarily chocolate candy.
It is owing to the Hershey Company’s vision and distribution that Reese’s today is a household name across the nation. Reese’s today takes credit for 47% of all seasonal sales in the convenience store channel in the United States and it would not have been possible without the variations that were launched after the Hershey Company took over. In the four commercial holiday seasons, namely Christmas, Valentine’s Day, Easter, and Halloween, the top two items sold are from Reese’s brand. This is phenomenal as the second best-selling brand amounts to only 10% of the seasonal sales as compared to Reese’s 47%.
As of 2020, the cash dividends the Reese brothers are earning annually on the stock split agreement amounts to $51.4 million. After 57 years of the deal, the original number of 666,316 shares that the Reese brothers retained of the Hershey common stock amount to 16 million shares of Hershey stock that has a value of $2.5 billion as of today. Since the workforce of the Reese plant is not unionized (unlike the workforce of the Hershey plant), the H.B. Reese Candy Company remains to be a subsidiary of Hershey.
