Fresh off its purchase of Pirate Brands, a top Hershey executive said the maker of Reese's, Twizzlers and other confections is looking to boost its presence in the rapidly expanding snack space through more acquisitions.
Hershey announced last month that it will purchase Pirate Brands — which makes better-for-you snacks like Pirate's Booty and Smart Puffs — from B&G Foods for $420 million. It's the latest push by the Pennsylvania company to grow in the sector where health-conscious, on-the-go consumers are increasingly turning to snacking as part of their daily routine.
Last year, Hershey bought Amplify Snack Brands, the parent company of SkinnyPop, for $1.6 billion. The candy manufacturer also snapped up meat snacks maker Krave Pure Foods in 2015, and acquired Ripple Brand, the parent company of better-for-you chocolate snack maker barkTHINS in 2016.
Todd Tillemans, president of Hershey U.S., told Food Dive that acquisitions will continue to play a major role in the company's growth strategy. "We really have a growth ambition across all components of snacking," he said. "We have now made those two acquisitions, but we are still acquisitive."
"We really have a growth ambition across all components of snacking. We have now made those two acquisitions, but we are still acquisitive."
Hershey, U.S. president
Pirate Brands was initially acquired in 2013 for $195 million and has performed extremely well for the serial acquirer in recent quarters. B&G owns more than 50 brands and had not been publicly planning to divest any of its products.
"There is a real marriage there where they've created something special and we have the humility to go and say, 'Wow we like what you’ve created, but we think we have unique capabilities to grow this at an accelerated rate,' " Tillemans said.
Michele Buck, Hershey's CEO, has focused extensively on turning the company into an "innovative snacking powerhouse" by diversifying its portfolio with M&A since she started overseeing the CPG giant in March 2017. The acquisition of Amplify was the largest purchase in Hershey's storied history.
"You look at the total landscape, there is going to be different snacking needs," Tillemans said. "Snacking has really grown."
When looking at future acquisitions, Tillemans said it doesn't matter if the company or brand is for sale if Hershey reaches out to inquire about a potential deal, it’s more about how it would fit in with its other brands.
With its recent acquisitions, he said SkinnyPop plays an "important role in better-for-you" and Hershey saw Pirate's Booty as an "attractive growth" opportunity because it is a salty product that is more youthful. "It’s less about whether they are on the market or off the market, it's where would there be a fill in to our portfolio,” he said.
Tillemans said Hershey plans to continue innovating and growing by offering more products in popular categories, including sweet and salty, better-for-you and protein-based snacks. Although studies have shown that millennials are driving growth in the better-for-you snacking category, Tillemans said it’s not just the younger generation that want snacks. Instead, it's the broad population that craves more variety.
"There are moments when you want a more indulgent snack and treat and there are moments you want a more better for you, so it's not just the millennials," he said.
Pirate Brands will be located with Hershey's Amplify division in Austin, Texas. Tillemans said keeping the snacking brands in Austin gives them independence while the company works to integrate them.
“It's not that we're trying to change them, we want them to enrich our gene pool, and it's a brilliant model,” he said. “We are now approaching a half billion dollars (in snack sales), and we clearly have ambition to double that and then we will set a new sight. That's a component of our overall corporate growth...It’s not just that we are going after any brand, we are going after brands that have a real sense of purpose."
As the company acquires new snacks, Hershey also has been stepping up its efforts on multiple fronts to enhance its brand and increase sales. The company recently prioritized its e-commerce strategy and unveiled an 18-wheel semi that will travel the country, working closely with convenience stores as more confection and snack purchases shift online.