The latest acquisition from the confectionary giant Hershey Co. involves a simple, yet increasingly popular popcorn product. Hershey’s acquisition of Amplify Snack Brands, makers of SkinnyPop, allows the company to get a top spot in the growing ready-to-eat popcorn category along with other good-for-you brands under Amplify’s portfolio.
“This deal, The Hershey Co.’s largest acquisition to date, is expected to create value for Hershey and Amplify’s shareholders and also for consumers, who will soon be able to find these wonderful brands available in more outlets,” Michele G. Buck, president and chief executive officer of Hershey, said during a conference call with securities analysts.
“Amplify is a high-growth snack food company focused on developing and marketing products that appeal to consumers’ growing preference for better-for-you snacks. With a 17.5% market share of ready-to-eat popcorns, Amplify is the second largest manufacturer within the category.”
Texas-based Amplify Snack Brands’ products include SkinnyPop popcorn, Paqui tortilla chips, Tyrrell’s English crisps and OatMega protein cookies. In the 12 months ended Sept. 30, the snack manufacturer generated net sales of $372 million along with organic sales growth of 9.4 percent for their third quarter and 8.6 percent for the year-to-date period.
Hershey’s $1.6 billion acquisition of Amplify is part of their strategy to become an “innovative snacking powerhouse.” Along with the acquisitions of Krave jerky and barkThins, the snack manufacturer has its foot in many snacking categories. SkinnyPop is now Hershey’s sixth largest brand, according to Buck.
“With a 13% compounded annual growth rate over the past five years, the ready-to-eat popcorn industry is positioned for continued strong growth,” said Patricia A. Little, senior vice-president and chief financial officer of the Hershey Co.
“Ready-to-eat popcorn’s increasing levels of household penetration, combined with on-trend better-for-you attributes, lead us to believe the category will continue to be adopted by an expanding breadth of consumers. Amplify’s status as the premier better-for-you popcorn brand, operating in an industry with strong growth and margin characteristics, makes the company a perfect complement to Hershey’s existing family of brands.”
Little goes on to describe Hershey’s marketing plans for their newly-acquired brands. The company plans on using Hershey’s prominence in the snack category to leverage the growth of Amplify’s snack products. They will use Hershey’s global marketing strategy to promote Amplify products and increase aisle presence in stores through their best-in-class category management.
“Hershey’s existing world-class R.&D. team will spur further disciplined product innovation that should result in greater purchase frequency and expansion of Amplify’s usage and consumption occasion. And finally, we plan to expand Amplify’s existing s.k.u.s (stock-keeping units) into mainstream channels using Hershey’s comprehensive distribution network, while simultaneously exploring white space opportunities.”
The company plans on keeping Amplify’s operations in Austin, Texas for the time being to leverage the agility and entrepreneurial spirit of the company, according to Little. However, the company is likely to expand as they find more success in their category.