Hershey is set to strengthen its foothold in the snacks space by acquiring the maker of a line of low-sugar and high protein bars, ONE Brands.
The $397 million deal, which was announced within a week after the U.S. chocolate giant made a minority investment in Irish protein bars company Fulfil, is expected to close in Q4 2019, subject to customary regulatory approvals and other closing conditions.
Hershey hopes to use the newly acquired company to provide a competitive offering of brands in the nutrition bars category, saying that ONE Brands will complement its existing Oatmega business, which was taken over as part of the 2018 acquisition of Amplify Snack Brands, and Fulfil.
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Hershey’s Chief Growth Officer, Mary Beth West, said in a prepared statement: “ONE’s portfolio of great tasting nutrition bars, with indulgent flavors such as Birthday Cake, Maple Glazed Doughnut and Peanut Butter Pie, will be a strong strategic fit within our overall innovation snacking powerhouse vision.”
She noted the company’s confection brands, such as Reese’s, will continue to be the engine that “drives our business while we broaden our better-for-you portfolio, offering more snacking choices for more consumers”.
Hershey’s spokesperson Jeff Beckman also told me that ONE Brands can help the chocolate maker extend its portfolio into new occasions, including “morning and on-the-go nutrition”, and broaden its reach to “younger and [more] urban” shoppers.
“ONE Bars are the fastest growing low-sugar, high protein bars in the U.S. … We will bring our expertise in sales and distribution, category management, digital commerce and supply chain efficiencies to grow this [nutrition bars] category,” he said.
While Hershey did not provide further financial details about the deal, it noted in a release that ONE Brands acquisition is expected to be “slightly accretive to earnings” in the first full year post closing.
ONE Brands’ founder Ron McAfee also said: “We’re proud of the brand we built and look forward to continuing to build on our momentum with the strength and capabilities that Hershey can provide. Our consumer proposition, brand equity and team provide us with confidence, especially when combined with an industry leader like Hershey.”
ONE Brands was previously invested by Cavu Venture Partners, a US investment firm that has also injected cash into some of the trendiest food and beverage companies, including High Brew cold brew coffee, organic chickpea puffs brand HIPPEAS, anti-oxidant beverage manufacturer Bai, and plant-based meat company Beyond Meat which recently partnered with KFC to create vegan fried chicken.
Hershey’s latest acquisition points to the fact that snack bars are still up for grabs by investors, although market researchers have warned start-ups in the space might face an increasingly difficult time getting their products on shelf and ultimately acquired, especially following the exits of Peter Rahal-led RXBar to Kellogg and Health Warrior to PepsiCo.
A report tracking the U.S. 2018 food and beverage investment showed the average check size for nutrition bars was only $1.9 million, significantly less than the $7.3 million average across the overall industry.
But just last week, the maker of Atkins-branded food products, Simply Good Foods, also announced plans to acquire privately held bars producer Quest Nutrition for $1 billion. Oreo maker Mondelēz also acquired a majority stake in refrigerated bars company Perfect Snacks in June.
Market research firm Euromonitor showed that Quest and RXBar ranked second and third, respectively, in the $3.8 billion U.S. protein and energy bars category in terms of market share last year, with Clif Bar being the category leader.
The overall health and wellness snack bars are expected to grow at a 2.4% CAGR from total revenues of $6.98 billion in 2018 to $7.88 billion in 2023.
Source: Forbes
