HERSHEY, PA. — Where is the next phase of growth for The Hershey Co.? The answer lies in scaling its pretzels and popcorn businesses.
“Currently, pretzels and popcorn are both around $2 billion in segment sales,” said Kristen J. Riggs, president of salty snacks, during the company’s March 22 investor day conference. “Other salty categories go from $7 billion all the way up to $10 billion in sales. So, we love the untapped potential of the pretzel and popcorn category and its ability to grow.”
Popcorn and pretzel brands owned by the company include SkinnyPop, Dot’s and Pirate’s Booty. Hershey acquired SkinnyPop in 2017, Dot’s Pretzels in 2021 and Pirate’s Booty in 2018.
“Currently today, SkinnyPop is No. 2, closing on No. 1 … and Dot's is already No. 3,” Ms. Riggs said. “So having a strong portfolio and really great brands is the first piece of the puzzle for us.”
Michele G. Buck, chairman, president and chief executive officer, added that SkinnyPop is generating approximately $500 million in sales and Dot’s has sales around $300 million.
Over the next three years, the company sees its salty brands achieving low double-digit sales growth, said Ms. Riggs.
“I'd say for salty, where we are less developed, I'd say our growth is more about where we are in the stage of developing the maturity of those brands than it is tied to the category growth,” Ms. Buck said. “I mean, certainly, we think the categories are going to continue to grow, but we have so much just fundamental upside there.”
Ms. Riggs added, “Starting with household penetration, these brands still have very low household penetration, which provides a lot of opportunity for us to grow their awareness. Popcorn is at 15% and SkinnyPop is at 15%, Dot's is at 9%, while popcorn and pretzels overall are in the high 50s in terms of household penetration as categories. So that opportunity for us to drive brand awareness and use our marketing tools really provides a lot of growth in scaling.”
Opportunities for growth include channel expansion, geographic expansion and tapping new use occasions. Ms. Riggs said the whole salty portfolio has room for growth in convenience stores and dollar stores. In addition, Dot’s least penetrated market is the Northeast, which also happens to be the largest pretzel market, according to the company.
“So, as we continue to drive and grow our distribution footprint on Dot's, we'll be able to capture those incremental sales,” she said.
Ms. Riggs added that new use occasions may include multipacks, party packs and innovation around combining The Hershey Co.’s salty and sweet portfolios. For example, Reese’s popcorn, which was in test markets last year, has just launched, according to the company.“This ability for us to bring sweet and salty and leverage the iconic brand of Reese's into the (salty) category … provides a lot of incrementality and growth,” she said.