Campbell and Hershey both announced deals yesterday in the thriving healthy snacks sector. The Camden. N.J.-based soup company, which also has a presence in sugary and salty delectables with its Pepperidge Farm cookies and Goldfish crackers lines, is buying Snyder's-Lance Inc., which peddles brands such as Snyder's of Hanover pretzels and Kettle and Cape Cod brand chips, for $6.1 billion, including debt. Hershey will pay $1.6 billion for Amplify Snack Brands, the Skinny Pop popcorn maker that also purveys the Tyrrells, Oatmega and Paqui lines.
“U.S. snack sales rose to $89 billion last year, growing at a compound average of 3% annually over the prior three years, according to market research firm IRI. That makes it a rare bright spot in an otherwise bleak market for packaged food,” points out Annie Gasparro for the Wall Street Journal.
“Campbell chief executive Denise Morrison said there is ‘a fundamental change in consumer behavior … the lines between snacks and meals are blurring.’ She said Campbell will now make everything ‘from soup to nuts,’ with 46% of its sales coming from snacks after the deal, and just over a quarter from soup,” Gasparro continues.
The deal, which is Campbell’s largest ever and its sixth in the last five years, “stands in sharp contrast to most of its other recent acquisitions. Those were designed to move Campbell into fresher-food categories seen by its leadership as more in line with today’s consumers, though management frequently highlighted snacks as a target for expansion,” observes Harold Brubaker for the Philadelphia Inquirer. Snyder’s-Lance is based in Charlotte, N.C.
“The acquisition of Amplify and its product portfolio is an important step in our journey to becoming an innovative snacking powerhouse as together it will enable us to bring scale and category management capabilities to a key sub-segment of the warehouse snack aisle,” Hershey president and CEO Michele Buck states in the release announcing the deal. Amplify is based in Austin, Tex.
“For Hershey, the deal further pushes the iconic confectionary company to look beyond chocolate. It’s a tenet of Buck’s strategy that pre-dates her elevation to the CEO role in March; she spearheaded the company’s acquisition of Krave jerky in 2015,” Beth Kowitt reports for Fortune.
“Experts say the difference consumers will experience is in where and how the products are sold. Campbell, a center-of-the-store giant in the supermarkets, could demand more of a presence for Snyder's-Lance products and Hershey's may expand Skinny Pop from grocery stores into big-box retailers and, with an emphasis on single-serving packs, convenience stores,” writes Zlati Meyer for USA Today.
Retailers have their own reasons to stock better-for-you foods.
“Food companies are working with increasingly punishing retailers that are under their own pressure as shoppers pick up their food staples at convenience stores and, increasingly, Amazon. To stay relevant, grocers have focused on fresh food to bring shoppers into their stores,” writes Lauren Hirsch for CNBC.com.
“Traditional packaged food brands, whether soup or bread or other packaged categories, they’re not growing. It's growing in health and wellness, organic, natural and then snacking,” BMO Capital Markets director Amit Sharma tells Meyer. “If you're a large company and you don’t see growth in your own brands, you have to go out and get them.”
In fact, Nielsen research posted on Hershey’s blog, “The Plume,” finds that “while growth is happening in a variety of traditional and healthy snack categories, products that call attention to specific healthful claims are driving the strongest uptick in sales. For example, snacking products that are non-GMO lead the way with an 18.2% surge in dollar sales for each of the past five years, followed by snacking products that are free from artificial colors/flavors (16.2%) and no/reduced sugar claims (+11.3%). Comparatively, the average snack product has seen an increase of only 1.2%. Even in traditionally indulgent snacking categories like salty snacks, health claims are driving sales.”
USA Today’s Meyer writes: “Branching out from old-line brands’ core products — especially if they’re junk food or preservative-laden packaged goods — is not new. Last month, candy manufacturer Mars invested in healthy-snack maker Kind. In October, Kellogg announced it was acquiring RXBar.”
More, no doubt, TK.