2018 Midyear Report: Top 5 Snack and Candy Stories
By Brett Dworski on Jun. 22, 2018CHICAGO -- It would be an understatement to define 2018 as anything short of paramount for snack and candy manufacturers, even only halfway through the year.
These pivotal six months have seen everything from billion-dollar acquisitions and bankruptcy auctions to an entire city’s deprivation of salty chips. And while product innovation has remained constant since January—it seems that new gummies, chocolates, nuts and crunchy snacks hit the market daily—more high-profile stories regarding companies’ financial gains and tribulations were the ones that stole the headlines.
Here are a few that still linger …
1. Ferrero acquires Nestle U.S. confectionery
In January, global confectionery company The Ferrero Group agreed to purchase Nestle’s U.S. confectionery business for $2.8 billion in cash.
The transaction, which officially closed the first week of April, made Ferrero the third-largest confectionery company in the U.S. market, adding Nestle's chocolate brands including Butterfinger, Crunch, Baby Ruth, and 100 Grand, as well as sugar brands such as SweeTarts, Laffy Taffy and Nerds. Nestle’s Toll House products and Kit Kat brand were excluded from the agreement.
The deal also included Nestle’s U.S. manufacturing facilities in Bloomington, Franklin Park and Itasca, Ill., and the confectionery-related employees. The company will continue to operate through Nestle offices in Glendale, Calif., as well as from its other current locations in Illinois and New Jersey.
2. Nestle takes over Starbucks marketing
In May, Arlington, Va.-based Nestle gained the perpetual rights to market Starbucks consumer and foodservice products globally for a cash payment of $7.15 billion to the coffee giant.
Pending the agreement—which is expected to close in the third quarter—Nestle may market, sell and distribute Starbucks, Seattle’s Best Coffee, Starbucks Reserve, Teavana, Starbucks Via and Torrefazione Italia packaged coffee and tea products anywhere outside of Starbucks’ 28,000 coffee shops. The deal excludes ready-to-drink items, marketed by PepsiCo, and any products currently sold within Starbucks stores.
The two companies will also collaborate on innovation and go-to-market strategies while Seattle-based Starbucks continues its own coffee sourcing and roasting and global brand management. Approximately 500 Starbucks employees will join Nestle to drive business performance and global expansion.
3. Necco Wafers sold in bankruptcy auction
The New England Confectionery Co. (Necco) was acquired by Greenwich, Conn.-based private-equity firm Metropoulos & Co. for $17.3 million in late May. The acquisition was made and closed during Necco’s federal bankruptcy auction, which occurred after Necco filed for Chapter 11 bankruptcy protection in April.
Days before the acquisition, however, reports suggested that Necco had been acquired for nearly $19 million by the Spangler Co., an independent confectionery company based in Bryan, Ohio. News eventually broke that Spangler withdrew from the deal.
4. Hershey cuts SKUs
On the heels of a year in which its candy, mint, gum and snacks sales rose 1.7%, The Hershey Co. revealed in late April it would cut SKUs of its candy products as a way of saving money.
Michele Buck, president and CEO of the Hershey, Pa.-based company, said during a company earnings conference call that factors such as increased delivery costs and cocoa prices have made it difficult for the company to produce and distribute its candy brands across the country.
Buck also said that she believes this initiative and subsequent shelf transformation will drive profitable growth not only for the company but also for its retailers.
5. Campbell acquires Snyder’s-Lance
In March, the Campbell Soup Co. closed on its acquisition of Snyder’s-Lance Inc. for $6.1 billion in an all-cash transaction. The deal, first announced in December, created a $10 billion company, with nearly half of its annual sales coming from snacks.
As part of the deal, Camden, N.J.-based Campbell merged its Pepperidge Farm products, such as Goldfish Crackers, Harvest Whole Wheat Bread and Golden Butter Crackers, with Snyder’s-Lance brands, including Hanover, Lance and Cape Cod, into a U.S.-only division called Campbell Snacks.
In a side note, Campbell Soup Co. itself is now said to be for sale, according to a recent report in the New York Post.