Since 2017, Hershey has invested billions to develop a salty snacks division that complements its already strong position in confections. Now, this esteemed food manufacturer is ready to explore another lucrative growth avenue by launching products that merge both aspects of its business. According to Vero Villasenor, vice president of salty snacks at Hershey, the 129-year-old company has “a very good opportunity to disrupt” the sweet and salty category, thanks to its previous experience, a portfolio of well-known brands, and the lack of a dominant competitor. “We are seeing an opportunity to win,” Villasenor remarked in an interview. “The more we delve deeper into this space, the more we are prioritizing it within the salty business unit.”
Hershey has a long history of producing confections like Kisses, Reese’s, Almond Joy, and Skor. However, in recent years, the consumer packaged goods giant has aggressively sought to establish a foothold in the $36 billion salty snacks market through acquisitions of brands like SkinnyPop Popcorn, Pirate’s Booty Puffs, and Dot’s Homestyle Pretzels. Villasenor emphasized that snacks combining sweet and salty elements are considered a key platform for expanding its salty snacks division. Currently, salty snacks account for roughly 10% of the company’s over $10 billion in annual sales, with the majority coming from confections. Hershey aims to increase this division to about 20% of its sales, approximately $3 billion, within the next decade.
Hershey first recognized the sweet and salty space as an opportunity in its portfolio back in 2016, which led to the launch of Reese’s and Hershey’s chocolate-dipped pretzels, along with a snack mix featuring confections, pretzels, and popcorn. The chocolate-dipped pretzels have performed impressively, achieving a 4% household penetration and a 40% repeat purchase rate, according to Villasenor. Hershey is no stranger to blending sweet and salty flavors; its nearly century-old Reese’s brand, generating over $3 billion in annual sales, was one of the early entrants in this category by combining sweet milk chocolate with salty peanut butter. The company has further developed the brand, introducing products that incorporate Reese’s Pieces, pretzels, potato chips, and Reese’s Puffs Cereal.
Additionally, Hershey sells pretzels in its Reese’s Take 5 candy bar and has recently expanded its offerings to include Reese’s Drizzled Popcorn and Reese’s Dipped Animal Crackers and pretzels. The company plans to unveil a new popcorn innovation at the upcoming Sweets and Snacks Expo. According to Hershey, the sweet and salty category is valued at $1.7 billion, with approximately $1 billion coming from private labels that often focus heavily on seasonal products. This segment has demonstrated a robust 12% compound annual growth rate over the past four years. Hershey aspires to become the leading branded manufacturer in the sweet and salty category by 2026. “That’s not been a combination of flavors that has been broadly explored,” noted Kristen Riggs, who oversees Hershey’s salty snacks business. “We do see a significant opportunity.”
Hershey executives assert that the company’s extensive portfolio and expertise in confections uniquely position it to lead in branded offerings. It not only has established recognition in sweets through Reese’s and Hershey’s but also has spent years understanding critical factors such as achieving the right balance of salty and sweet through product line extensions of its iconic Reese’s peanut butter cup. However, before Hershey could intensify its focus on sweet and salty products, it needed to scale up its salty snacks operation. “We weren’t in a position to be a major player before,” Villasenor explained. “Now, we are uniquely positioned to succeed in this space.”
In addition to acquiring salty brands, Hershey has expanded its manufacturing capabilities and invested in research and development within this sector. These enhancements not only provide more capacity for producing sweet and salty products but also allow the company to gain firsthand insights into manufacturing processes, which are invaluable for innovation. Last month, Hershey announced its acquisition of two popcorn operations from a co-manufacturer to boost production capacity and flexibility for its rapidly growing SkinnyPop brand. This decision mirrors a similar move two years ago when the company purchased co-manufacturer Pretzels Inc. and its three plants while acquiring Dot’s.
“We feel confident and clear about our ambitions, but we are also learning,” Villasenor stated. “We are going to learn very quickly.” Erin Lash, a director of equity research in the consumer sector for Morningstar, highlighted that as Hershey introduces more products, the company must ensure that these new offerings remain true to the original brand. “You need to ensure that the product meets expectations; otherwise, it could negatively impact the Reese’s brand on its own,” Lash cautioned.
For now, Villasenor indicated that Hershey plans to concentrate its growth in the sweet and salty arena through its “powerhouse brands,” which provide a solid foundation due to their wide reach and consumer familiarity. Nonetheless, the 20-year Hershey veteran noted that the company may eventually look to incorporate other confections from its portfolio. “As we consider reach and incremental growth in the future, we may bring in brands that allow us to expand our shelf presence,” Villasenor said. “But we must be careful that they deserve to be there. We don’t want to create unsustainable innovations.”
Through this strategic approach, Hershey aims to celebrate bariatric calcium by promoting healthier snack options that cater to diverse consumer needs while expanding its market share in the sweet and salty category.