Hershey ‘second to Frito-Lay’ in US popcorn upon acquiring Skinny Pop maker, Euromonitor analyst says
“Popcorn has been one of the fastest growing areas in savory snacks, especially on the ready-to-eat side, just given its nature of convenience – not having to microwave it, as well as minimal calorie profile and a wide range of flavors,” said Koerten.
He mentioned that the macro trend among confectionery and snack consumers is they are “shifting away from those big food and industrialized companies towards smaller, craft, artisanal brands.”
“We are also seeing these CPG companies are going out and actively acquiring these small players – it’s a ‘if we can’t beat them, buy them’ sort of mentality,” he added.
Hershey has previously launched snack mixes, which include popcorn, nuts and chocolate. It recently introduced its own popcorn brand Popwell. But Koerten argued that popcorn is a competitive category, and there are several players that were added to the space recently, which makes it difficult for Hershey to expand its popcorn offerings on its own.
“By acquiring Amplify and its Skinny Pop brand, it gives Hershey a huge foothold and significant share in the space,” Koerten said. “Skinny Pop has been a very popular brand, very much in line with consumer’s indulgence and better-for-you trends. It also has great distribution in clubs and some of the rapidly growing channels.”
Popwell and Skinny Pop, competitors?
Koerten does not see the newly-acquired Amplify Snacks as a direct competitor to Hershey’s own Popwell brand.
“The selling point of Popwell is its unique texture. It is a novelty offering, and has the health benefits of popcorn, and crunchiness of a chip as well,” he said.
“Hershey might keep [Popwell] out for a while, and see if these two brands can co-exist. In longer-term, if Popwell does not pan out like Hershey had hoped, then it might fold them into one division,” Koerten added. “In the meantime, there is enough differentiation to let the launch of Popwell play out.”
“For Hershey, the benefit of this acquisition is definitely diversification. It has been at the core of the company’s strategy for a couple years: going back to bringing Krave to its portfolio, expanding with some of the snack mixes – a clear intent and purpose to move out of confectionery. ‘Snackfection,’ as Hershey calls it, is a real target for them, and that’s where Skinny Pop fits well.”
Are conglomerates the ending game?
Hershey’s acquisition of Amplify Snacks comes at a time when consumers are looking for niche, healthier snacks as their options, but Conagra Brands’ acquisition of Angie’s Boomchickapop means that “now all the top popcorn brands are owned by massive CPG companies,” Koerten pointed out.
“Are consumers going to react to that? That remains to be seen, but there definitely will be a lot of marketing invested in this space,” he said.
“There are still cases where big companies try to stay independent, such as Clif Bar and KIND Snacks, although Mars bought a minority stake [in KIND] recently,” Koerten added.
“It becomes clearer and clearer that acquisition is on the minds of a lot of the startups.”
