Chocolate brands

Hershey to divest Krave and artisan chocolate brands

Dive brief:

  • Hershey seeks to part with its The Krave Jerky brand as well as its Scharffen Berger and Dagoba artisan chocolate lines, Hershey CEO Michele Buck told analysts during the company’s first quarter earnings call.
  • Buck said a sale would allow the candy and snack maker to more effectively prioritize spending toward salty snacks and nutritional bars that Hershey has acquired in recent years.
  • “These are great brands that continue to resonate with consumers, but they require a different marketing model which we believe is best supported by other owners,” Buck told analysts in a transcript from Seeking Alpha.

Dive overview:

For most of its 126 year history, Hershey was known for its iconic chocolate bars, Kisses and Reese’s cups. but as consumers’ eating habits change, the company has worked aggressively to expand its reach to other snacking opportunities. As the company continues to innovate in the field of sweets, including the deployment of Mint and Dark Chocolate Coated Kit Kat Duos or York Peppermint Pattie Thins to meet calorie needs – Buck has made no secret of his desire to turn Hershey into a snack powerhouse.

A key part of Buck’s evolution into other snack food categories has been through acquisitions. In 2017, it bought Amplify, the parent company of popcorn maker SkinnyPop, for $ 1.6 billion, the largest deal in the company’s history. It also acquired cheese puff maker Pirate’s Booty and protein bar maker One Brands.

At the same time, Buck has been outspoken about the challenges facing Krave, a choppy brand that has struggled as consumers drift into mainstream options where growth is more robust and a proliferation of competitors in the high-end segment. reduced profit margins. Hershey wrote the mark Krave, which it acquired for $ 220 million in 2015, from $ 108 million earlier this year.

When it comes to artisanal chocolates, Hershey is best known for its consumer brands that resonate with a larger segment of consumers in the aisles, checkouts or for Halloween and other parties – Scharffen Berger and Dagoba are much more specialized with much smaller market shares. It makes sense for Hershey to focus her attention on areas where she has much more expertise and can promote and innovate brands to ensure they resonate with a wider range of consumers.

As Hershey seeks to join other CPGs to keep pace with changing consumer tastes and trends, he must be careful not to be distracted by the challenges facing Krave or the small chocolate brands that generate sales. low income compared to its other popular brands. The revenue Hershey generates from sales, as Buck noted, will help him prioritize his new savory snacks and bar business.

While Buck was not CEO of Hershey when the company acquired Krave, she reportedly argued for the deal. Hershey appears to have learned from the misstep by buying Krave to hone his acquisition prowess in other deals. Its recent acquisitions focus on more mainstream brands that could benefit from Hershey’s market and distribution expertise. As consumers’ dietary habits and preferences continue to change, Hershey will need to change and evolve as it has for over a century. While not all acquisitions work, Hershey has no choice but to expand its reach into new snack categories.

“Our biggest focus for mergers and acquisitions is to nibble and really fill the places where we are not currently meeting demand,” as better for you and / or salty, Buck told Food Dive in 2019. “We’re not there yet, but we’re on our way (to becoming a snack powerhouse). And I don’t think I would ever declare that we are there.”

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