The history of the Hershey Company is rooted in failure before finding unprecedented success. Milton Hershey didn't build a confectionery empire overnight; he launched multiple failing candy businesses in Philadelphia, Denver, and New York before cracking the formula for mass-producing affordable, high-quality milk chocolate. When he introduced his iconic milk chocolate bar in 1900, it transformed how Americans consumed sweets, shifting chocolate from an exclusive luxury for the wealthy into an everyday staple.
Beyond confectionery, Milton Hershey built an entire company town in rural Pennsylvania and established an industrial school for orphaned boys that continues to operate today. Understanding how a bankrupt caramel maker became a global household name requires examining the specific milestones, production innovations, and philanthropic foundations that shaped the brand.
Early Failures and the Road to Caramel Success
Milton S. Hershey was born in Derry Township, Pennsylvania, in 1857. After completing a fourth-grade education, he was apprenticed to a Lancaster printer, but he quickly realized he belonged in the candy kitchen. In 1876, with $150 borrowed from his aunt, he opened his first candy shop in Philadelphia. It folded after six years.
Undeterred, Hershey moved to Denver, Chicago, and New Orleans, learning the intricacies of caramel-making from skilled confectioners. In 1886, he returned to Lancaster, Pennsylvania, and established the Lancaster Caramel Company. This venture finally gained traction. By using fresh milk instead of water, he created caramels with superior texture and flavor. Within a few years, the Lancaster Caramel Company employed hundreds of workers and exported goods across North America and Europe. As highlighted in recent coverage by Harvard Business Review, the implications are worth noting.
The Birth of the Hershey Chocolate Empire
Milton Hershey first encountered German chocolate-making machinery at the 1893 World's Columbian Exposition in Chicago. Sensing that the future of sweets lay in chocolate rather than caramel, he purchased the heavy processing equipment on the spot, installed it in Lancaster, and spent several years perfecting his milk chocolate formula.
In 1900, he sold the caramel enterprise for $1 million—an astronomical sum at the time—to focus entirely on chocolate. He chose a remote dairy region in Derry Township, Pennsylvania, to build his manufacturing facility. This location provided immediate access to fresh dairy farms and an abundant workforce, laying the groundwork for the community that would become Hershey, Pennsylvania.
Key Milestones in Hershey's Evolution
- 1900: The first Hershey's milk chocolate bars hit the market, offering consumers a smooth, affordable alternative to European imports.
- 1907: The company introduces bite-sized, flat-bottomed molded chocolates wrapped in foil, named "Kisses" due to the distinctive machine-manufacturing sound during production.
- 1925: Hershey launches the Mr. Goodbar candy bar, combining milk chocolate with roasted peanuts.
- 1937: The company debuts the Krackel bar, introducing crispy rice into milk chocolate blocks.
- 1942: During World War II, Hershey develops the Field Ration D bar—a high-calorie, heat-resistant chocolate ration designed to survive tropical combat conditions without melting too easily.
Philanthropy and the Hershey Industrial School
Milton Hershey's business strategy was deeply intertwined with social welfare. Because he and his wife, Catherine, had no children, they decided to dedicate their vast fortune to helping others. In 1909, they established the Hershey Industrial School, a residential boarding school for orphaned boys.
To ensure the school's long-term survival, Milton Hershey transferred his controlling ownership of the Hershey Chocolate Company into a trust for the school in 1918. Today, the institution is known as the Milton Hershey School, providing comprehensive education, housing, and care to thousands of children from low-income backgrounds. The school remains the majority shareholder of the company, meaning every chocolate bar purchased directly funds educational opportunities for students in need.
Building a Company Town
The creation of the factory in Derry Township expanded into the construction of a complete corporate town. Hershey didn't just build production lines; he built houses, a trolley system, a public school system, a park, and recreational facilities for his workers.
During the Great Depression of the 1930s, Milton Hershey refused to lay off his factory workers. Instead, he launched a massive construction campaign, employing his staff to build the town's iconic landmarks—including the Hershey Hotel, the Hersheypark arena, and the community building. This infrastructure provided steady wages when the rest of the American economy was contracting sharply.
Modern Innovations and Global Expansion
As consumer preferences shifted through the late 20th and early 21st centuries, the company diversified its product lines beyond traditional milk chocolate blocks. Acquisitions of major brands like Reese's, Kit Kat (under license in the United States), and Twizzlers brought broad variety to the portfolio.
Modern manufacturing facilities rely on automated tempering, continuous conching, and strict quality control measures to maintain consistency across billions of units. Supply chain sustainability has also become a major operational focus. Through programs like Cocoa For Good, the corporation invests in farmer training, community infrastructure, and environmental conservation in West African and South American sourcing regions.
Common Pitfalls in Confectionery History Research
When researching the history of confectionery giants like Hershey, enthusiasts frequently encounter several misconceptions:
- Confusing the Founders: Milton Hershey is often confused with other industrial pioneers of the era, though he operated independently rather than alongside competitors like Mars until much later in the industry's timeline.
- Overlooking Early Failures: Popular summaries often skip the Lancaster Caramel Company era, mistakenly implying that Hershey launched straight into chocolate manufacturing.
- Misinterpreting Corporate Ownership: Many assume the company is entirely publicly traded without realizing that a significant portion of voting shares belongs to the Milton Hershey School Trust, governing corporate decisions with philanthropic priorities in mind.
Frequently Asked Questions
Why did Milton Hershey choose Derry Township for his factory?
The location offered abundant fresh milk from local dairy farms, reliable rail access for shipping, and enough physical space to build both a massive manufacturing plant and an adjacent residential community for employees.
How did the Hershey Kisses get their name?
The name originated from the machine used to deposit chocolate drops onto the conveyor belt during manufacturing, which emitted a suction sound resembling a kiss.
Does the Milton Hershey School still own the company?
Yes. The Milton Hershey School Trust holds a controlling stake in the Hershey Company, ensuring that corporate dividends directly support the school's educational programs and residential facilities.
What was the purpose of the World War II Field Ration D bar?
The U.S. military requested a high-calorie, non-melting chocolate ration that would provide emergency sustenance for soldiers in combat zones without spoiling in extreme heat.
