UPDATE: Sept. 23, 2019: Hershey completed the acquisition of One Brands. The company said in a release it plans to expand the brand's existing offerings.
- Hershey is purchasing One Brands, the maker of protein bars, for $397 million. The deal is expected to close in the fourth quarter of this year.
- One Brands focuses on indulgent flavors such as pumpkin pie, birthday cake and blueberry cobbler. It is the second addition this month to Hershey’s better-for-you snacking portfolio.
- “Our beloved confection brands will continue to be the engine that drives our business while we broaden our better-for-you portfolio, offering more snacking choices for more consumers,” Mary Beth West, Hershey’s chief growth officer, said in a statement.
Hershey is back in the M&A game. Earlier this month, Hershey’s VC arm, C7 Ventures, took a minority stake in Fulfil — a producer of high-protein, vitamin-fortified nutrition bars in the UK and Ireland. Although it appears to be the first investment from the VC arm, it is not Hershey’s first foray into snacking beyond its iconic candies.
Starting in 2015 with meat snacks company Krave and snacking chocolate barkTHINS a year later, the Pennsylvania-chocolatier began to move more aggressively into snacking. Its biggest deal came in 2017 when Hershey added AmplifySnack Brands, parent company of SkinnyPop, for $1.6 billion. The company also spent $420 million to acquire Pirate Brands from B&G Foods last year.
Earlier this year, Hershey’s CEO Michele Buck told Food Dive if the company did not grow beyond its signature sweets, it would be "missing an opportunity" to reach more consumers. It’s no surprise that Buck had this perspective. Snacking has evolved into one of the fastest-growing segments in the food space, with sales of more than $89 billion annually. Datassential estimated that consumers eat about four to five snack foods a day.
At the same time, Hershey has outlined a strategy that emphasizes it has no intention of completely diverging from its core business of indulgent sweets. Its recent investments reflect that ethos as brands like FULFIL and One Brands are better-for-you products that have an indulgent side.
Hershey’s spokesperson Jeff Beckman told Forbes that One Brands will move the company's portfolio into new occasions, including “morning and on-the-go nutrition”, and broaden its reach to “younger and [more] urban” shoppers. While candy remains a core focus for Hershey, the Pennsylvania company is aware that in order to grow it needs to get its offerings into the hands of more people throughout more times of the day. Its push into snacking and now protein bars likely reflects that way of thinking.
These two recent acquisitions are likely just the tip of the iceberg. Hershey is clearly looking to rebalance its portfolio to cater to consumers who are looking for on-the-go nutrition without sacrificing indulgent taste. Buck has previously said that her goal is to turn the company into an "innovative snacking powerhouse" by diversifying its portfolio with M&A.
"Our largest focus for M&A is snacking and really on filling out the places that we don’t currently meet demand,” like better for you and or savory, Buck told Food Dive on the sidelines of the annual Consumer Analyst Group of New York conference in February. "We’re not there yet, but we’re on our journey (to becoming a snacking powerhouse). And I don’t think I would ever declare that we’re there."
The company’s choice to invest in the crowded protein bar space is not surprising. Snack bars — particularly granola, protein and meal replacement ones — have been at the top of the list in terms of dollar sales growth from 2013 to 2016, according to a study by Nielsen.
In addition to One, bars remain a hot area for M&A. Just last week, Simply Good Foods Company, the maker of bars and other products under the Atkins brand, announced it was buying Quest Nutrition for $1 billion. And in June, Mondelez International purchased a majority stake in Perfect Snacks, the manufacturer of organic, non-GMO, nut butter-based protein bars and bites.
By offering a healthy option to consumers, Hershey is delivering on its better-for-you promise. With the company’s far-reaching distribution and supply chain, there is little doubt that One Brands will soon be populating shelves and grabbing consumer attention in a much more prominent way.