Hershey has altered its game plan for 2016 and intends to push its newly acquired meat brand, Krave, more than its core brands of chocolates and sweets. This move is basically to capitalize on the increase in demand for non-sugary snacks.
Due to changing food habits, the demand for sugary sweets has gone down significantly as the people in the US are growing more health-conscious by the day. Said John P. Bilbrey, President and Chief Executive Officer of The Hershey Company, "Over the long term we expect constant currency net sales growth of 3% to 5%. This reflects challenges related to changing U.S. shopping habits and volatile international markets. We remain focused on growth and will continue to invest in our core brands in the U.S. and key international markets and build on the strategies we have established as we believe they will benefit the company over the long term. We will also make incremental investments in our existing snacks platform as it will provide us with another lever of growth," according to Business Wire.
The chocolate maker acquired the second largest jerky brand in US stores, Krave Pure Foods Inc., in January 2015. With slowing confectionary and chocolate consumption, other niche food markets are getting the leeway to make their mark in the markets. Hershey's acquisition of Krave is a step towards tapping this niche market.
As per MarketWatch, Bilbrey states, "In the premium segment that we compete in, the meat-snacks business continues to be up about 25%." The meat brand has done remarkably well in 2015, reflecting doubled sales as revealed by Marcel Nahm, Hershey's vice president of US snacks. "The main nemesis in the food industry right now is sugars," said Darren Seifer, a food and beverage analyst at NPD Group. While consumers are now more consciously avoiding carbonated soft drinks and sweets, they are "gravitating toward more things on the savory side, or marketed as better for you," he said.
The consumers are definitely opting for snacks that are low in sugar but high in protein levels. This is the ideal scenario for Krave to swoop right in with its lemon-garlic turkey jerky and sweet-chipotle-flavored beef jerky items and take over the market.
While the emphasis lies with the meats, the Hershey reports showed the profits were up 5.4% or $213.4 million in the fourth quarter, as represented in Mashnew. However, the revenues reflected a decline of 5%. Their CFO, Patricia Little, said that the company benefitted from lower dairy prices, which was again offset by higher cost of simple ingredients.
The chocolate-making giant has now shifted its attention towards women as they characterize the growing opportunity for Krave. While men have always been their largest customers, the company is not about to underestimate the importance of women as their potential customers, as more often than not, it is they who decide what enters the kitchen cabinets and their children's lunch boxes.
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