Hershey is going all in on salty snacks

While it’s known for its eponymous sweet chocolate bar, shifting consumer behavior has made The Hershey Company a little salty.

In recent years, consumers have been eating fewer confections—particularly chocolate—but more savory snacks, while the chocolate space has faced increasing competition and lots of volatility. Now, the parent of brands like Reese’s, Kit Kat, and Almond Joy is looking to diversify its portfolio to keep consumers engaged. That strategy started with its purchase of SkinnyPop parent Amplify Snack Brands in 2017, followed by Pirate’s Booty parent Pirate Brands, Dot’s Pretzels, and, most recently, LesserEvil. And this year, it introduced a new business model, ONE Hershey, to better market the company as more than just a sweets seller.

The new strategy led Veronica Villasenor, a 20+-year Hershey veteran, to shift from president of salty snacks to becoming the company’s first global chief brand officer, tasked with building long-term customer relationships and establishing Hershey’s brand growth agenda for the next three to five years.

Hershey’s North America Salty Snacks business accounts for about 11% of sales, which the company aims to increase to 20%, with the goal of becoming “the undisputed No. 2 player in salty snacks as an enterprise” (it’s currently third), Villasenor, who shared how the company is working to prove the unit is worth its salt, told Retail Brew.

Crunch time: The ONE Hershey strategy brings together the company’s sweet, salty, and protein units, which previously operated separately, into a single commercial operation. It has evolved how the company works with retailers, unifying its 1,100 retail sales employees, consumer insights, and in-store merchandising. (It’s a move not dissimilar to L’Oréal’s recent effort to unify its sales and category development teams across its Consumer Products Division to boost its competitive advantage with retailers.)

“We’re creating demand with our campaigns, but it’s also important that we think about how those translate into shopper communications, retail media, how we show up on the shelf, how we create tentpoles as well that drive interruption for consumers,” Villasenor said.

One of the tentpoles is March Madness, where this year Hershey brought its sweet and salty snacks together on the shelf (the company was the Official Candy, Gummy, Pretzel, and Popcorn Partner of the NCAA—quite literally a mouthful). It used the opportunity to launch Dot’s Snack Mix, merchandised alongside Reese’s and gummy candy Shaq-A-Licious SLAMS, in retailers.

And last year, the company combined sweet and salty to launch Reese’s Filled Pretzels, and has helped it gain share in the pretzel category, the company said.

Creating new occasions that bring sweet and salty together is one of the company’s “biggest opportunities” with retailers, Villasenor said.

Fresh twist: Its efforts are paying off. Retail sales for North America Salty Snacks, excluding LesserEvil, rose 10% in the first quarter this year. Dot’s sales were up 13% YoY and, thanks in part to more distribution, LesserEvil’s sales jumped 65%.

Since acquiring Dot’s, the company has doubled the brand’s household penetration from 8% to 16%, Villasenor said, by “supercharging” its brand through increased distribution, different pack sizes across areas of the store, new innovation, and new occasions for snacking. The brand sells sizes ranging from family-sized 24 oz. bags to smaller 3.3 oz bags, to aid in customer acquisition, along with multipacks, which have been particularly successful in driving household penetration with variety packs.

With the pretzel category at about 62% household penetration, she said, the brand has been bringing in incremental consumers and jumpstarting a sleepy category, which is beneficial not only to Hershey, but its retail customers, too.

Across its other salty brands, the company is working to diversify its audiences to avoid cannibalization.

“We’re very intentional about where they play, what are the needs that they’re going against, how we’re positioning them, and how we’re engaging with consumers, so that we’re really maximizing the power of the portfolio that we have, versus being on top of each other,” Villasenor said.