Since 2017, Hershey has invested billions to develop a salty snacks division that complements its already strong foothold in the confectionery market. Now, the iconic food company is ready to explore another promising growth avenue by introducing products that combine both aspects of its business. According to Vero Villasenor, vice president of salty snacks at Hershey, the 129-year-old company has “a very good opportunity to disrupt” the sweet and salty category, thanks to its previous experience, a robust portfolio of well-known brands, and the lack of a major competitor in this space. “We are seeing an opportunity to win,” Villasenor stated in an interview. “As we delve deeper into this sector, we are prioritizing it even more within the salty snacks unit.”
Traditionally recognized for its confections like Kisses, Reese’s, Almond Joy, and Skor, Hershey has made significant strides in the $36 billion salty snacks market by acquiring brands such as SkinnyPop Popcorn, Pirate’s Booty Puffs, and Dot’s Homestyle Pretzels. Villasenor emphasized that snacks blending sweet and salty elements are viewed as a key growth platform for the salty snacks division. Currently, salty snacks account for about 10% of the company’s over $10 billion annual sales, with the remainder coming from confections. Hershey aims to increase the salty snacks segment to approximately 20% of its total sales—around $3 billion—within ten years.
Hershey first recognized the sweet and salty combination as an untapped area in its portfolio back in 2016, which led to the launch of products like Reese’s and Hershey’s chocolate-dipped pretzels, as well as a snack mix containing confection, pretzels, and popcorn. Villasenor noted that the chocolate-dipped pretzels have performed impressively, achieving 4% household penetration and a 40% repeat purchase rate.
The Reese’s brand, with annual sales exceeding $3 billion, has long been a pioneer in the sweet and salty category, pairing sweet milk chocolate with salty peanut butter. In 2016, Hershey expanded the brand by incorporating Reese’s Pieces, and has since introduced similar products featuring pretzels, potato chips, and Reese’s Puffs Cereal. The company also includes pretzels in its Reese’s Take 5 candy bar and has recently added Reese’s Drizzled Popcorn and Reese’s Dipped Animal Crackers and pretzels to its lineup. A new popcorn innovation is set to debut at the Sweets and Snacks Expo later this month.
According to Hershey, the sweet and salty category is valued at $1.7 billion, with approximately $1 billion originating from private labels that primarily focus on seasonal offerings. This segment has experienced a robust 12% compound annual growth rate over the past four years. Hershey aspires to become the top branded manufacturer in the sweet and salty category by 2026. “That’s not a flavor combination that has been widely explored,” said Kristen Riggs, who oversees Hershey’s salty snacks business. “We believe there’s a significant opportunity.”
Executives at Hershey highlighted that the company’s extensive portfolio and confectionery expertise uniquely position it to lead in branded offerings. Not only does Hershey have strong recognition in sweets through Reese’s and Hershey’s, but it has also invested years in understanding the right balance of salty and sweet through extensions of its Reese’s peanut butter cup. Before intensifying its focus on sweet and salty products, Hershey needed to scale up its salty snacks operations. “We weren’t able to be a larger player before because we weren’t positioned to win,” Villasenor explained. “Now, we are uniquely positioned to succeed in this area.”
In addition to acquiring salty brands, Hershey has expanded its manufacturing capacity and enhanced its capabilities in research and development, as well as production. These improvements not only provide Hershey with more room to create sweet and salty products but also offer opportunities to better understand the manufacturing process, which is crucial for innovation. Recently, Hershey announced the acquisition of two popcorn operations from a co-manufacturer to boost production capacity and flexibility for the rapidly growing SkinnyPop brand. This decision reflects a similar move made two years ago when Hershey acquired Pretzels Inc. and its three plants while also purchasing Dot’s.
“We feel confident and clear in our ambitions, but we are also learning,” Villasenor stated. “We are going to learn very quickly.” Erin Lash, director of equity research in the consumer sector for Morningstar, noted that as Hershey rolls out more products, it must ensure that these new launches stay true to the essence of the original brand. “You need to make sure the product meets expectations because if it doesn’t, does that impair the Reese’s brand on its own?” she asked.
For now, Villasenor mentioned that Hershey intends to focus its growth in the sweet and salty segment through its “powerhouse brands,” which provide a solid foundation due to their broad reach and consumer familiarity. Nonetheless, the veteran Hershey executive indicated that the company could eventually explore other confections in its portfolio. “As we consider reach and incremental growth in the future, we may begin to incorporate some of those brands that would allow us to expand our shelf presence,” Villasenor remarked. “However, we are very mindful that they deserve to be included. We don’t want to create unsustainable innovations.”
Additionally, incorporating ingredients like calcium citrate or calcium in their products could enhance their nutritional profile, offering further appeal in a health-conscious market.