The Hershey Company, the owner of Cadbury, Reese’s, Kit Kat and more, has acquired the better-for-you (BFY) chocolate brand Lily’s Sweets for $425 million. The confectionary giant entered an agreement to purchase Lily’s Sweets last month after the company announced it would be selling its chocolate business in March. The move comes as a part of a wider strategy for Hershey to offer healthier options.
“Hershey is focused on developing a BFY confection portfolio that offers a variety of choices to meet the evolving needs of our consumers,” said Chuck Raup, Hershey’s US president in a press release. “Lily’s is a great strategic complement to our existing offerings in this growing segment of the confection category.”
So how BFY is Lily’s Sweets compared to Hershey’s lineup of other chocolate brands? The Boulder, Colorado-based brand launched with four chocolate bars in 2012 in Whole Foods and later expanded its line of bars to include baking chips and other confections. All of Lily’s products are sweetened with stevia, contain low or no sugar and are made with natural ingredients. Its offerings are also GMO-free, gluten-free and Fair Trade certified.
In terms of Lily’s nutrition facts, its Dark Chocolate Almond Bar, for example, contains 140 calories per 30-gram serving, 11 grams of fat, 9 grams of dietary fiber and less than one gram of sugar. For comparison, Hershey’s Special Dark Chocolate With Almonds contains 210 calories per 43-gram serving, 14 grams of fat, 3 grams of dietary fiber and 20 grams of added sugar. While the two bars are fairly on par in terms of calories and fat (especially considering that Hershey’s serving size is 13 grams more), Lily’s is the clear winner in the sugar category.
However, Hershey has made significant strides in the BFY category. It offers zero-sugar versions of its classic chocolate candy, York Peppermint Patties, Jolly Ranchers and others. It also recently introduced and announced plans to release a vegan Kit Kat bar. But it’s safe to say these BFY sweets are not what Hershey is known for.
According to Statista, Lindt-owned Russell Stover was the leading sugar-free chocolate candy brand in the US last year with about 114.8 million dollars in sales ̶ making up about half of the market. Reese’s, Hershey’s and Hershey’s Dark came in third, fourth and fifth place, respectively, with a combined sales figure of $19.3 million. Lily’s Sweets, however, snagged second place with $51.3 million in sales.
Hershey’s acquisition of Lily’s is indicative of its intent to compete with Lindt in the growing sugar-free chocolate space. The fast growth of Lily’s – reportedly posting a 55 percent year-over-year increase, according to Forbes –reflects the growing market appetite for low and zero-sugar chocolate. Over the next five years, the sugar-free chocolate market is expected to reach a global market size of nearly $500 million, with a compound annual growth rate (CAGR) of 5.7 percent, according to Market Research Insights.
Perhaps Hershey is mirroring Nestlé, whose executives are rethinking the company’s portfolio due to its largely unhealthy offerings. It’s also possible that Hershey simply took advantage of this purchasing opportunity to increase its BFY portfolio, regardless of its other brands. Either way, the acquisition will widen Lily’s manufacturing and distribution capabilities and maintain the brand as a leader in the BFY chocolate space.