Daily Briefing (Insiders Only): Hershey’s Snags Sour Strips Amid a ‘Mixed Bag’ of M&A Deals
The Hershey Company acquired candy brand Sour Strips according to an announcement late last week, and only one day after the candy and snack giant posted less-than-stellar earnings that were weighed down by high cocoa prices and pressures across all business segments.
The sour candy brand, launched in 2019 by YouTuber and powerlifter Maxx Chewning, has amassed a substantial following on social media. It is poised to capitalize on that base and accelerate across the U.S. and enter international markets under Hershey’s direction. The deal comes as Hershey expands its candy offerings with the additions of Jolly Rancher Freeze Dried, Jolly Ranchers Ropes, and Shaq-a-licious Gummies, said president and CEO Michele Buck.
State of Play: While there’s been plenty of brands on the auction block this year, according to Axios, many of those deals are just now dragging across the finish line after heightened seller expectations dragged out those processes amid an already-constrained environment.
For those deals that have secured final signatures, the report states they may inspire others to come on to the market (see the industry excitement around PepsiCo’s $1.2 billion acquisition of Siete Foods, for example). Nonetheless, these moves all provide insight into what types of businesses strategics are seeing as solid acquisition targets at this moment in time (For the likes of General Mills, that means smaller-size assets between the $1-$2 billion range).
Recent Rewind:
- Celebrity chef-founded FITCRUNCH moved completely into the house of 1440 Foods, which had owned a significant minority stake since 2019. The deal brings the active nutrition company out of a PE portfolio rooted in general food manufacturing and in line with 1440’s protein-heavy lineup.
- Del Real Foods, a legacy Hispanic food producer, was bought by Guatemalan food manufacturing and restaurant conglomerate Corporación Multi Inversiones. The deal follows a similar tempo as FITCRUNCH with a well-established brand offering plenty of potential to unlock portfolio synergies.
According to a report from the National Confectioners Association, the non-chocolate candy segment – which spans gummies, chewy candy, hard licorice, lollipops and marshmallows – remains a consumer favorite through prosperous, inflationary and pandemic times. The issues highlighted by its Q3 earnings may explain why Hershey is so sweet on Sour Strips.
But the deal also marked a diversion from Hershey’s M&A strategy as of late, which has largely looked to salty snacks for growth, including the acquisitions of Dot’s Pretzels in 2021 for $1.2 billion and SkinnyPop in 2017 for $1.6 billion.
