- Hershey is selling Krave to Sonoma Brands, a private equity investor. The incubator is run by Jon Sebastiani, who started Krave in 2009. Terms of the deal were not disclosed.
- Sonoma said while Krave has increased its distribution and added new products to the mix such as a plant-based jerky, the meat snacks company will experience increased innovation under its new owner.
- The sale comes five years after Hershey purchased Krave for $220 million. But during its time under the ownership of the sweets maker, Krave struggled as mainstream jerky options increased and other premium players entered the market.
It was only last week when Hershey CEO Michele Buck said the company was looking to divest Krave, along with artisan chocolate brands Scharffen Berger and Dagoba. Buck said a sale would allow the manufacturer of confections and snacks to more effectively prioritize its spending toward the salty snacks and nutrition bars that Hershey has acquired in recent years.
Buck has made no secret that Krave has been a disappointment for Hershey. Mainstream jerky brands have been growing faster — both in terms of sales and consumer adoption — than premium brands including Krave. On the premium side, a glut of brands have been squeezing margins, making the space difficult.
Under her watch, Buck has been shaping Hershey into a "snacking powerhouse." This has included innovation in its core sweets but also a series of acquisitions, including the manufacturer of Pirate's Booty cheese puffs, protein bar maker One Brands and Amplify, the parent company of popcorn maker SkinnyPop. The confectioner paid $1.6 billion for Amplify, making it the largest deal in the company's history.
As the storied company competes in the increasingly competitive snacking space, Hershey can't risk spending time or money focusing on non-core assets like Krave that simply don't generate sufficient growth. Hershey succeeds at innovation and marketing its offerings to the masses, something that is harder for a premium brand such as Krave. The decision to unload Krave will allow Hershey to invest the money in other snacks and bars, which have become a key growth area since Buck took over in 2017.
It's uncertain how many suitors there were for Krave, but Sonoma Brands appears to be a home where the brand can regain its shine. Sonoma, an equity firm specializing in "disruptive, high-growth consumer brands," has a snack-focused portfolio whose brands include Smashmallow and Dang coconut chips. Hershey has not broken down how Krave has been doing, but Buck told analysts last week the collection the company is unloading "are great brands that continue to resonate with consumers."
It's no surprise that Sebastiani, who founded Krave, had his sights set on acquiring the brand after Hershey decided to sell it. He is intricately familiar with Krave, and could bring his expertise and insight into growing it again under his watch. This isn't the first time an executive has bought back a brand from a big CPG company after selling it. Last year, Campbell Soup sold Bolthouse Farms to an investor group headed by former Bolthouse CEO Jeff Dunn.
Sonoma's food and beverage offerings aren't jerky, but they do fit into a category of brands that shoppers could grab on the go. A jerky like Krave could give the individual the protein boost they need, while Smashmallow or Dang provide a sweet edge afterward. Then, it could be washed down with an organic drink from Medlie veggie drink or Guayaki Yerba Mate.
Hershey wrote down the value of the Krave brand by $108 million earlier this year. While the brand may not be what it once was, it still could do well under the oversight of a privately owned firm that specializes in trendy brands by a leader who knows the product. In addition, the public's hunger for protein and eating on the go continue to bode well for Krave, giving it a chance to regain some of its former glory.