April 27, 2016
Chocolate-flavored dried meat? Not quite.
Hershey Co., the candy maker based in "Chocolatetown," Pennsylvania, is trying its hand at beef jerky to try to capitalize on a growing food industry and boost its struggling sweets sales.
The Wall Street Journal reports the company will start selling its Krave protein bars — mixed with other ingredients like fruit — in August, and is also working on its new SoFit brand that will feature protein smoothies in squeezable pouches and snack bars, all sold online.
Why would a company known for its chocolate "Kisses" and peanut butter cups take a dive into the health craze? Two reasons:
• Hershey's candy business is struggling. According to Nasdaq, sales and profits have declined recently as consumers shift toward healthier options.
• The beef jerky business might be the next big thing. Joseph DiStefano of The Philadelphia Inquirer noted in March 2015 that dried meats are a growing — and profitable — snack trend: With U.S. consumption of meat snacks (jerky and sticks) jumping to $2.5 billion last year from $1.5 billion in 2009 (according to IRI Worldwide data), and new brands like Krave marketing to young, sports-oriented or nature-food enthusiasts, "jerky could be next on the short list of categories -- coffee, Greek yogurt, nut bars -- that have experienced breakthrough-led expansion in the last five years," writes Berwyn-based food-companies analyst Jonathan P. Feeney today in a report to clients of Athlos Research.
Regarding the second point, it's not like Hershey isn't taking a gamble. They purchased Krave, previously a snack maker owned by California wine heir Jon Sebastiani, in January 2015. The buying price (reportedly between $200 million and $300 million) was much higher than Krave's 2014 sales ($36 million).