The growth was partially driven by the company’s recent acquisition of Amplify Snacks, especially its ready-to-eat popcorn brand SkinnyPop, which grew 8.3% in sales during the period, gaining 1.2 points of marketplace share.
Hershey said the US popcorn category remains “healthy” with an approximately 4% annual growth. It added its snacking sales grew 0.3% for the 12-week period ending July 15.
Michele Buck, the company’s CEO, said: “We have a good visibility into second-half plans and expect both SkinnyPop and ready-to-eat popcorn category strength to sustain as we move throughout the year.
“Our expansion to participate in broader snacking will continue to be an important lever in our growth,” she added.
Buck noted Hershey had established Amplify Snacks as an independent division to grow its emerging and better-for-you brands. The unit also includes barkTHINS, which the company acquired in 2016.
“barkTHINS is delivering incremental consumers and occasions to our portfolio and growing approximately 35% over the latest 12 weeks,” she said.
‘Pressured’ confectionery category
Hershey’s confectionery business only grew 0.6% in sales during Q2 as the category was “pressure,” said the company.
Buck said: “This was driven primarily by competitor lapping significant innovation during the same time last year.
“Hershey’s CMG (candy, mint and gum) takeaway of -0.4% resulted in a share decline of 30 basis points [in Q2],” she added.
“Our core franchise grew 1.3% during this period, driven by Reese’s and Ice Breakers gum. Reese’s growth accelerated, driven by the limited rollout of Reese’s Outrageous! and additional media supporting a new campaign.”
Not ruling out M&A in emerging markets
While North America’s net sales increased by 5.6% to $1.56bn, Hershey’s international segment posted a 3.1% increase in sales, reaching $191.7m.
Buck noted the company’s revenue grew high-single digit in Mexico, and its performance in Brazil was barely impacted by domestic political unrest and a truckers' strike.
She added: “In India, our core brands, Hershey’s Sofit, Jolly Rancher and Brookside are growing over 50%. We anticipate these strong segment sales and profit trends to continue in the second half of the year.”
Meanwhile in China, where Hershey has sold Golden Monkey, Buck said the company is optimizing its footprint to focus on its core SKUs, provinces and channels.
“Sales are stabilizing [in China]. Our core Hershey’s SKUs in targeted channels are growing share and our bottom line is improving meaningfully,” she said.
Asked if Hershey has similar merger and acquisition plans in these emerging markets to what it has been doing in the US, Buck said: “We’re making really good progress on our own in China and India, [but we’re] not ruling out any potential strategic partnership going forward.”
Business plans and outlook
Hershey said its new KitKat line, which includes a KitKat snack mix, is on track to start producing Q4 and will be a “key enabler of the brand’s 2019 growth.”
The company expects its full-year 2018 organic growth to be around 2%.