Hershey Co. is going to be making beef jerky. The iconic American candy giant is facing falling chocolate sales in the U.S., and is turning to high protein snacks.
The 122-year-old company is famous for its chocolate confections, frequently paired with almonds or peanut butter. Now, it’s set to stake much of its financial future on a distinctly non-chocolate offering: beef jerky. Though Hershey’s revenue has risen to $7 billion selling its chocolate-infused candy, with sugar and carbs now widely considered a main contributor to obesity and health problems, fewer Americans are now reaching for candy bars. Hershey saw its sales fall for the first time in more than a decade last year, with more people preferring Greek yogurt and protein bars rather than sweets for their snacks. To close the gap, Hershey plans to sell other things people will eat.
“If it says protein on it, consumers will buy it,” Carl Jorgensen, a director of wellness strategy at retail-marketing firm Daymon Worldwide, told Bloomberg. “This is something Hershey has to do.”
— bored2tears (@bored2tears) May 27, 2016
Last year, Hershey bought Krave Pure Foods, makers of artisan beef jerky, for between $200 and $300 million in their first purchase outside the candy industry. Analysts wondered if chocolate jerky, a confection similar to the (in)famous chocolate-covered bacon, might be considered, and what the purchase meant for Hershey’s future products. Investors initially didn’t welcome the deal, and Hershey’s shares dropped over 7 percent as a result; after all, what business does the maker of Hershey’s Kisses and Reese’s Peanut Butter Cups have with beef jerky?
As it turns out, Hershey’s purchase may have been the first step in a wise move to ride the popularity of protein snacks, as CNN Money noted at the time.
“The meaty acquisition is the latest attempt by Hershey to expand its product base. Meat snacks are a booming business worth $2.5 billion now and growing about 25% annually, according to Hershey and KRAVE. In addition to expanding its product line, Hershey is also seeking to grow abroad. It also purchased Chinese candy maker Shanghai Golden Monkey for $584 million about a year ago, which doubled Hershey’s presence in China.”
Forbes also noted the enormous possibilities in buying the premium beef jerky-maker, who, at the time of the purchase, boasted around $35 million in sales. Through buying KRAVE, Hershey now has access to millennial and Whole Foods customers, and Hershey itself said that it could turn it into a $500 million brand.
“Hershey recently said it would start selling dried meat bars, under the Krave beef jerky brand it bought last year. It also announced on Tuesday it had acquired barkTHINS, which makes chocolate snacks using fair-trade cocoa. Hershey has seen a meltdown in candy sales, as well as falling demand for mint and gum, which helped it post a 5.6% decline in revenue in its latest quarter, it said on Tuesday. This is the third straight quarter of sales declines and analysts are questioning what will drive growth for the company, if not candy. Hershey has said it’s targeting 3% sales growth this year.”
— Bloomberg (@business) May 28, 2016
Consumers, especially young people and millennials, are now snacking more than ever and eating less of the traditional three square meals a day. As consumption of sweets has flattened, Hershey foresees a big future in protein. The company has already announced a new line of snack bars, complete “with acai berries, trail mixes that feature small pieces of Reese’s Peanut Butter Cups, and jalapeno almonds and pumpkin seeds coated in protein,” according to Bloomberg.
Hershey’s goal is to make $2 billion in revenue on snacks in order to maintain growth even as U.S. chocolate and candy consumption declines, and about a quarter of those sales to come from jerky. Despite what changes may come, Hershey executives have been quick to stress that they are still very much a chocolate company. They remain the number one candy producer and seller of chocolate in the United States, and they control about a third of the candy market.
Still, as the times change, Hershey recognizes that it’s time to change with it.
[Photo Illustration by Scott Olson/Getty Images]