The statement resonates with CEO Michele Buck’s vision for Hershey, building an “innovative snacking power house,” she said shortly after the Reese’s maker purchased Amplify Snacks for around $1.6bn towards the end of the last year.
Hershey wants more companies like Amplify Snacks, according to Little.
“We would prefer acquisitions similar in size and profitability to Amplify,” she said. “After the last several years of evaluating snack assets, Amplify’s strong margin profile, particularly in North America, where gross margin is greater than Hershey’s average, provides us with the scale, brand and product proposition to grow the business.”
Hershey said Amplify Snacks would add a five-point benefit to its organic net sales in its recent Q4 and full-year earnings conference.
“We’re currently performing an assessment of the Amplify international portfolio (which includes UK-based Tyrrells it acquired in 2016) to determine how to best maximize the long-term prospects of the business,” Little added.
Amplify’s core brand SkinnyPop is currently number two in the US popcorn, with a 17% market share , according to Little.
Core confections remain ‘advantaged’
Confections will remain Hershey’s core business although the company is exploring new categories for growth, Buck said.
“Confectionery is one of our largest snacking categories and remains advantaged,” she said.
“It has high household penetration and frequency, channel ubiquity and is responsive to investment support. The category has grown at a 2% CAGR over the past four years with growth of 1.7% in 2017.”
Hershey is currently investing in its core capacity in 2018, with new lines for Reese’s and KitKat. Reese’s saw 6% sales growth in 2017 thanks to Hershey’s focus on “strong branding and appetite appeal,” said Buck.
“In the second half of the year, we’ll have balanced take home and instant consumable innovations across Hershey’s Gold, Reese’s Outrageous, Hershey’s Cookie Layer Crunch Triple Chocolate,” she added.