Hershey has got a craving for some new snacking treats.
The chocolate maker on Friday predicted sales would increase by 2% to 3% in 2017, due to the rollout of new Hershey’s Cookie Layer Crunch bars, expanded distribution of barkTHINS, and new Reese’s and Krave snacks. Hershey (HSY) said sales growth would accelerate in the critical North America market, putting the snacking giant in position to outperform the broader food industry. Wall Street analysts had projected total revenue of $7.63 billion for 2017, implying 2.6% growth from last year’s total of $7.44 billion.
In 2016, total sales in the North American market—where Hershey does a bulk of its business—only grew by 1% to $6.5 billion from the prior year.
“Cookie Layer Crunch we feel good about,” said Michele Buck, who currently serves as chief operating officer but will become Hershey’s next president and CEO in March. “We also have some investments we’re making in expanding the portfolio to participate more broadly in other snacking occasions, like Krave. We continue to believe those are important investments to drive growth for us into the future.”
Hershey has aimed to broaden the company’s portfolio with the recent acquisitions of Krave and barkTHINS—deals that Buck herself steered—while also powering forward with some innovation for core brands like Reese’s and Kit Kat. New treats coming in 2017 include new packaging for Reese’s Crunchy Cookie Cup and a limited edition red velvet flavored Kit Kat for Valentine’s Day.
“Our consumer research indicates that millennials want new flavors and textures,” said outgoing CEO J.P. Bilbrey. That echoes what other Big Food executives have claimed in recent years: millennials are more interested in experimenting with bolder and unusual flavors, and as a result, there’s been greater product innovation for big brands across all aisles of the grocery store.
Though much has been made about the growing consumer trend that tilts toward healthier foods found on the perimeter of the grocery store, Americans still spend a lot on indulgences. And with snacking making up a third of all eating occasions, companies like Hershey are well positioned to market to those mini meals.
Buck acknowledged that the snacking industry in 2017 seems on track to broadly boost innovation efforts this year, implying competition will stiff for Hershey as it battles Mars Inc., Nestle, and even newly public Hostess Brands (TWNK)—all aiming to appeal to Americans’ sweet tooth.
“It looks like it is going to be a big year of innovation for the category,” Buck said. “And if we look historically, whenever there has been a lot of innovation in this category, it tends to be a pretty strong category year.”
Hershey will share more details about how the company intends to tackle the snacking category and new cost-savings initiatives at the company’s investor presentation on March 1.
