Hershey’s SkinnyPop Adds Manufacturing Muscle Via Copacker Acquisitions

With snacks trending upward and vertically-integrated supply chains becoming increasingly appealing to large corporations amid continued market volatility, The Hershey Company is doubling down on both.

Hershey announced plans yesterday to acquire two Weaver Popcorn Manufacturing facilities – one in Bethlehem, Pennsylvania and another in Whitestown, Indiana – where its popcorn brand SkinnyPop is currently produced. The deal is still subject to standard regulatory approval and will be financed with cash on hand as well as short term loans, according to a press release. Terms of the deal were not disclosed, but a spokesperson for Weaver noted that the facilities’ current employees will transition to The Hershey Company.

“In response to consumer snacking trends, we continue to evolve our supply chain, making significant investments in the size, scale and capabilities of our network, improving resiliency while we continue to strengthen existing supplier relationships,” said Jason Reiman, chief supply chain officer at The Hershey Company, in a press release.

During the company’s Investor Day presentation last month, Hershey outlined its snack portfolio growth plans, which entails investing in supply chain capabilities and working to scale the operating model. According to its Q4 2022 earnings report, Hershey’s snack set brought in $272 million in net sales that quarter, a 71% increase year-over-year. In 2022, SkinnyPop’s retail sales alone totaled $495 million. According to IRI, U.S. packaged popcorn sales have increased 11.4% to over $2 billion in the past three years.

“Hershey has experienced tremendous growth over the past few years, stemming from a combination of successful strategy execution and an increase in more snacking occasions among consumers,” said Kristen Riggs, president of salty snacks at The Hershey Company, in a press release. “In fact, SkinnyPop has been number one in retail sales growth for ready-to-eat popcorn over the last three years.”

Riggs added that over the next three years, the company would seek to grow gross margin for its salty snacking business by 300 basis points, by utilizing “multiple levers, both commercial and operational.

The confectionary and snacking giant currently owns six candy-focused manufacturing facilities in the U.S. in addition to nine plants located across Asia, South America and Canada. Hershey’s owns over 50 brands including leading snack businesses SkinnyPop, Pirate’s Booty and Dot’s Homestyle Pretzels.

The company has spent the last seven years transitioning from a focus on confection, building a portfolio targeting the broader snack set. In 2017, the chocolate maker acquired Amplify Snack Brands which included SkinnyPop, Paqui tortilla chips and Tyrrells potato chips. Brands under Amplify division have waxed and waned over the years, with SkinnyPop accounting for the majority of the group’s sales. Within the broader company, there have also been moves to increase its snack brand holdings. In 2018 the company bought Pirate’s Booty from B&G Foods, followed a year later by the acquisition of One Brands, maker of protein bar One Bar, for $379 million.

Other recent deals have been aimed in part at improving margins. The company acquired Dot’s in 2021 for $1.2 million alongside the brand’s manufacturing arm, Pretzels Inc., to further expand its salty snacks manufacturing capabilities. During the investor day presentation, Riggs shared that Pretzel’s Inc is also now producing other Hershey’s products, such as Pirate’s Booty.

Her colleague, Will Bonifant, VP of U.S. & Canada Supply Chain, noted in his own presentation that owning manufacturing capabilities would allow the company to also explore innovation where salty snacks could cross over into confection, using a chocolate drizzled popcorn as an example.

“Being able to take products that were outsourced and then insource them, gives us opportunities to expand margin,” Riggs said. “In the long term, there’s more of those supply chain capabilities and opportunities out there. “