Chances are that if you hear the word “Hershey” the first thing that comes to mind is “chocolate.” Last year the Pennsylvania-based company earned $7 billion in revenue from selling the sweet treat in all kinds of varieties. But as consumer tastes change to healthier options, Hershey’s candy sales have started to dwindle for the first time in 10 years. In order to prevent any further losses, the company wants to hop on the recent protein craze with new items like beef jerky and trail mix.
Hershey entered the dried meat market in 2015 when it bought Krave, a premium jerky company operating in California’s wine country. Brands like this have helped change the public’s perception of beef jerky from a salty gas station staple to a low-carb, protein-rich snack. Since being acquired by Hershey, Krave’s sales have doubled to more than $70 million. Hershey executives hope it will grow into a $500 million brand as people start depending on snacks for a major portion of their daily nutrition. “With consumers having less traditional meals and snacking more, they’re looking for sources of protein,” said Hershey’s North American president Michele Buck. “These things ebb and flow, but protein is here to stay.”
The company’s ultimate goal is to increase snack sales to $2 billion, with a quarter of that revenue coming from meat products like beef jerky. But analysts remain skeptical about Hershey’s ability to attract consumers without a decent dose of sugar. After all, snacks only accounted for 2 percent of the company’s overall U.S. business last year. For many people Hershey remains inextricably linked to candy and it’s likely to stay that way for some time. Still, one upcoming product could potentially bridge this gap between the company’s sugary past and its protein-packed future: Reese’s Peanut Butter Cup trail mix. Combining the classic candy with healthy ingredients like dried fruit and nuts may be just the gateway that some consumers need in order to trust Hershey with non-sugary snacks.
Questions:
- Can Hershey convince health conscious consumers to try their non-candy products?
- Along with changing consumer tastes, Hershey also faces growing competition from premium candy brands. Given this sales threat, should Hershey focus more on developing higher quality candy rather than protein-rich snacks?
Source: Craig Giamonna, “Hershey Chases the Protein Craze With Beef Jerky,” Bloomberg BusinessWeek, May 27, 2016. Photo by mhiguera.