To strengthen up its snacking business, Hershey Co (HSY.N) has agreed to buy two pretzel makers in separate agreements valued roughly $1.2 billion, the U.S. chocolatier announced on Wednesday.
For the 12 months ending September, the total net sales of the two firms – Dot’s Pretzels Llc, the owner of Dot’s Homestyle Pretzels, and Pretzels Inc – were around $275 million, according to Hershey.
According to the company, Dot’s accounted for 55 percent of the pretzel category’s growth in the United States during the last year.
After the COVID-19 pandemic helped them earn outsized gains last year from people primarily remaining at home, packaged food companies have been spending billions of dollars to boost their snacking portfolios and keep sales growth levels high.
“(Savory and better-for-you snacks are) two areas where we’re undeveloped, and we have a chance to grab incremental snacking occasions,” Hershey CEO Michele Buck said earlier this year at a conference.
In recent years, Hershey has been doubling down on the snacking area, purchasing SkinnyPop popcorn manufacturer Amplify Snack Brands for $1.6 billion in 2018 and entering the nutrition bar category recently.
Dot’s Pretzels was founded in Dot Henke’s home kitchen in North Dakota more than a decade ago, and Pretzels Inc. is owned by private investment firm Peak Rock Capital.
When the agreements finalise, which is expected by the end of the year, Hershey will add three manufacturing locations and four pretzel-seasoning facilities.
Mondelez International Inc (MDLZ.O), a competitor, announced in May that it would pay $2 billion for Chipita S.A., a Greek snacks company that owns 7Days, Chipicao, and Fineti, among other croissant and baked snack brands.Hershey, which already produces Reese’s Peanut Butter Cups and SkinnyPop Popcorn, said the new acquisitions will boost its adjusted profitability for the coming year.
