This week the news cycle was sweetened by the announcement of Mondelez International’s roughly $23 billion bid for the Hershey Company, and the latter’s subsequent rejection of the deal.
The back and forth between the two companies was rumored to have been going on for months, yet when the final deal was issued, Hershey’s Board of Directors unanimously rejected the offer and “determined that it provided no basis for further discussion,” according to a company statement.
If successful the union would have brought together the candy industry’s second- (Mondelez) and fifth- (Hershey) largest companies by sales. The deal is just one in a history of attempts to merge Hershey with another industry player; previous bids in the past decade from Wm. Wrigley Jr Co and a joint bid from Nestle and what was Cadbury Schweppes were also both rejected.
For the first quarter of 2016, Hershey reported sales of $1.8 billion (a 5.6 percent decline from the same period in 2015). While the company has 80 brands, many of which are confection based, more recently Hershey has been trying to push into the snacking space. Key players in this shift include Hershey’s Brookside, SoFit, Krave Jerky and BarkThins brands.
At this summer’s Project NOSH Brooklyn, Hershey Global VP of Snacks, Anthony Tyree, spoke to the changing product mix under the brand, and how the company is responding to the growing consumer demand for snacks.
“From a Hershey perspective, we’re seeing the trends, we’re adapting, we’re understanding the consumer wants and needs and how those are evolving,” Tyree said to the crowd. “In the end, our strategy is to provide great tasting snacks that expand and cross the spectrum of need states and wants — from treat to indulgent, to better for you.”
Whether this is by acquisition (in the case of Krave or BarkThins) or internal development (such as with Brookside and SoFit), the company is not content to rest on its candy-coated laurels. And perhaps it’s this knowledge about what the future can hold that swayed the board’s decision.
“Core confections means a whole to us, it plays in a $25 billion segment, but there are a lot of other opportunities in the adjacency space that are big sizes and high growing, that fit within our core capabilities,” Tyree said this past summer. “So as you think of Hershey, it’s not just the same old Hershey. Its an evolving company that continues to evolve with a sense of leaving a lasting legacy for at least a hundred plus more years.”
For further insight into the snack category and Hershey’s take on it, please view the video of Anthony Tyree’s presentation below.