FOOD SAFETY CONCERNS WITH CHOCOLATE “Keeping Your Sweets Safe” 1

Leading North American manufacturer  quality chocolate and non-chocolate confectionery  chocolate-related grocery products  leader in the gum and mint category Global Manufacturing Operations  Manufacturing facilities in US, Canada, Mexico, Brazil, China, India and Malaysia 2 THE HERSHEY COMPANY

We use more than 1 BILLION pounds of milk a year  almost 2 pounds of milk to make one pound of milk chocolate We make over 3.5 BILLION bars per year We make 13.6 BILLION kisses per year across all our kiss shaped brands!  4 days of production would make enough Kisses to stretch from New York City to Los Angeles 1 day of Syrup production would make 12.2 million 8 oz glasses of chocolate milk 1 week of production would make enough snack size bars to completely cover 4 football fields 3 FUN FACTS

4 HERSHEY GLOBAL BRANDS

HERSHEY LOCAL JEWELS 5

Salmonella  Chocolate Products Cadbury 2006 Nesquick Chocolate Powder2012 Chocolate Marshmallow Eggs 2013  Peanut Products Con Agra Peter Pan Peanut Butter2007 Peanut Corporation of America POTENTIAL FOOD SAFETY RISKS

Listeria  Dairy Ingredients Allergen Concerns  Peanut, Almond, other Tree Nuts, Milk, Soy, Wheat Foreign Material  Metal on Metal in processing equipment 7 POTENTIAL FOOD SAFETY RISKS

Consumer well being Hershey is an $8 billion brand, and growing Global Distribution Our brand is our name 8 WHY IS FOOD SAFETY IMPORTANT

Everyone  Identify the “right” thing to do  Train people on the “right” thing  Practice the “right” thing  Empower employees to do the “right” thing “Doing The Right Things Right Everyday” 9 WHO IS RESPONSIBLE FOR FOOD SAFETY

Global Manufacturing and Distribution  Standards differ  Infrastructure differs  Cultures differ  Food Safety is equal Diverse product line presents different challenges 10 CHALLENGES TO FOOD SAFETY

Product Excellence Program HACCP Based Approach  Food Safety  Food Quality  Regulatory Compliance Assure Safe, High Quality Products Across the Supply Chain  Sets expectations, defines programs 11 GLOBAL FOOD SAFETY SYSTEM

Identify  Product quality and safety concerns Control  Develop systems to control product quality / safety concerns Monitor  The effectiveness of the controls 12 PRODUCT EXCELLENCE PROGRAM

13 PEP IS THE WAY WE OPERATE INNOVATION SUPPLY CHAIN GOVERNANCE PEP

New manufacturing facility New manufacturing process New products New market New regulations New technology 14 DRIVERS OF INNOVATION

15 THE INNOVATION PROCESS

Overlays the innovation / commercialization process Quality Design Review New Material / New Product / New Process Product Qualification Commercialization 16 DESIGN QUALITY IN

Product review  Recipe development  Regulatory review – where manufactured and where sold  Label review  Dietary concerns – Kosher, Halal  Key requirements identification Claims – Peanut Free, Sugar Free, Reduced Fat Certifications – Organic, Rain Forest Alliance Unique product attributes GMOs 17 NEW MATERIAL / NEW PRODUCT

Process review  Process Controls  Product Attributes  Product Safety Equipment review  Sanitary Design  Ability to clean effectively  Change over capability 18 NEW PROCESS

19 PEP IS THE WAY WE OPERATE INNOVATION SUPPLY CHAIN GOVERNANCE PEP

Ingredient Packaging Receiving Manufacturing Shipping Warehouse Distribution Retail / Consumer 20 SUPPLY CHAIN

Supplier Qualification  Supplier Approval Program  Ingredients  Packaging Food Contact Packaging - qualify as an ingredient  Equipment  Contract Services 21 SUPPLIER QUALITY PROGRAM

Inbound Inspection Process  Load Conditions  Carrier Conditions  Ensure Correct Material, Approved Supplier Sampling, Certificate of Analysis 22 RECEIVING

Prerequisite programs form the foundation  Premises Food Defense  Facility Structure Utilities – air, water, steam, lighting Chemical Compliance and Control Integrated pest management Waste management and disposal 23 MANUFACTURING

Prerequisite programs form the foundation  Equipment Product protection – physical contamination control Cleaning and sanitation Calibration Allergen Control  People Dress and grooming Plant practices Training 24 MANUFACTURING

Master Control Plan  Food Safety  Food Quality  Regulatory Control Key control points  Chemical, Biological, Physical, Regulatory  Monitoring, Corrective Action, Verification, Validation 25 MANUFACTURING

Program modeled on the Sanitary Food Transportation Act of 2005 Sanitary Transportation Controlled Shipping Conditions 26 SHIPPING

Facility Design  Construction style and material  Appropriate Storage Conditions Integrated Pest Management Program Stock Rotation Controlled Storage Conditions 27 WAREHOUSE / DISTRIBUTION

Customers - Confection Protection at Retail  Warehousing and Storage  Environment  Pest Management  Stock Rotation Customer and Consumer Feedback 28 RETAIL / CONSUMER

29 PEP IS THE WAY WE OPERATE INNOVATION SUPPLY CHAIN GOVERNANCE PEP

Program and Policy oversight  Shelf life  Product coding  Traceability  Incubation hold  Recall program management, mock recall activities 30 GOVERNANCE

Assessment program  Internal manufacturing facilities  Compliance to GFSI certification requirements  Assessments across the supply chain 31 GOVERNANCE

32 PEP IS THE WAY WE OPERATE INNOVATION SUPPLY CHAIN GOVERNANCE PEP

“Doing The Right Things Right Everyday”  Identify the “right” thing to do  Train people on the “right” thing  Practice the “right” thing  Empower employees to do the “right” thing 33 WHAT DOES FOOD SAFETY MEAN TO HERSHEY

QUESTIONS?