Hershey has purchased two popcorn businesses from co-manufacturers as it seeks to increase production capacity and flexibility for its fast-growing SkinnyPop brand.
The confectionery and savory snack giant buys factories in Indiana and Pennsylvania from mass popcorn giant Weaver Popcorn. The purchase price and timing of completion of the transaction, which is subject to customary regulatory approvals, were not disclosed.
The deal is the latest in a series of manufacturing and brand acquisitions by Hershey, best known for Kisses, Reese’s and other confections since 2017, in the highly competitive $36 billion salty snack category. is rapidly giving the company an overwhelming presence.
“Not having our own popcorn production facility was an opportunity we wanted to address quickly,” Kristen Riggs, who oversees Hershey’s $1.2 billion salty snack business, said in an interview. Hershey now owns the manufacturing capacity for two of his other salty snack brands, Pirate’s Booty puffs and Dot’s Homestyle Pretzels.
“The key is being able to secure the runway to continue to accelerate this growth … there are no constraints,” Riggs said in an interview. “We think of our salty business as a business that scales, a business that grows for us. I have.”
optional caption
Christopher Dohring/Food Dive
Hershey’s salty snack sales contribute about 10% of the company’s annual sales of more than $10 billion. Hershey aims to grow the division to about 20% of company sales, or about $3 billion, within 10 years.
A key strategy for Buck’s move to salty snacks is through acquisitions.
A favorite of Hershey CEO Michele Buck, SkinnyPop is a big part of that ambition. Buck acquired her Amplify, the parent company of popcorn brand SkinnyPop, in 2017 for $1.6 billion. This is the largest deal in the company’s history.
When Hershey acquired the brand, SkinnyPop was making about $200 million in annual sales. The company is now approaching $550 million in sales, which has grown at a compound annual growth rate of 16.3% over the past three years. The brand now has a presence in all major retailers.
Hershey’s decision to acquire capacity for its popcorn business is similar to two years ago when it purchased co-manufacturer Pretzels Inc. and its three factories while also acquiring Dot’s.
SkinnyPop is the second best-selling brand of ready-to-eat popcorn in retail sales, but Hershey is optimistic that it’s in only 15% of households, so there’s plenty of room for further expansion. The acquired Weaver factory accounts for more than half of Skinny Pop’s annual production.
“This capability drives our growth and margins, allowing us to invest in and grow iconic brands like SkinnyPop,” said Riggs.
For Hershey, being able to produce popcorn in-house has many benefits, she said.
Hershey can change production lines in as little as a week to meet changing consumer demand for a particular product or to quickly introduce a new product to market. Co-manufacturers often work with multiple clients and typically set production schedules on a monthly or quarterly basis, making it difficult to incorporate unexpected production changes.
Owning the facility gives Hershey a direct involvement in the production of popcorn and gives Hershey access to popcorn as it provides valuable insights that help innovate the product. It also gives Hershey more flexibility to reach new consumption opportunities, as new product innovations and packaging his types can be rolled out more seamlessly.
The plant purchase gives Hershey more control over the entire production process and better control in case of supply chain disruptions.
“Our intention is to continue to invest in our capabilities as we expand and grow our salty snacks business,” Riggs said. “This is exactly in line with that strategy.”
Riggs said Hershey will continue to work with popcorn producer Weaver and other co-manufacturers after signing the deal. Weaver has been producing SkinnyPop popcorn since the brand was introduced in 2010.
