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April 24, 2020

Krave on block as Hershey readies brands for sale

US confectionery giant Hershey has revealed it is to divest three brands so it can prioritise "scale assets".

By Leonie Barrie

US confectionery giant Hershey is to put three of its brands on the block so it can prioritise “scale assets”.

The company told analysts yesterday (23 April) it would be looking for buyers for its Krave jerky brand – snapped up five years ago as part of moves to diversify away from confectionery – and its specialist chocolate brands Scharffen Berger and Dagoba.

CEO Michele Buck said Hershey is “actively re-evaluating priorities and resourcing”.

Speaking to analysts after Hershey reported its first-quarter results, Buck said: “In order to better prioritise resources against assets that fit our business model and scale capabilities, we are working to divest our Krave, Scharffen Burger and Dagoba brands.

“We will share more information regarding these divestitures in the future. It’s important to note that our learnings from recent acquisitions have underscored the importance of asset scale and margin profile. 

“We are obsessed with scale assets closer to US$100m, with high margins that enable brand investment to drive growth. 

“These are great brands that continue to resonate with consumers, but they require a different go to market model that we believe is better supported by other owners. These actions will enable us to prioritise our recently acquired scale assets, within salty snacks and nutrition bars.”

Buck stressed the decision to offload assets was not Covid-19-related.

However, yesterday Hershey withdrew its financial guidance for the year. Buck said it has become increasingly difficult to predict the coronavirus impact on the business.

The Reeses’s owner made the announcement in conjunction with its first-quarter results, which showed an increase in top-line sales but an 11% decline in net income.

Buck said: “We continue to focus on making the best long-term decisions for all our key stakeholders and believe this resilience will make us stronger in the days and years ahead.”

Hershey bought Krave in 2015, organic chocolate brand Dagoba in 2006 and premium dark chocolate company Scharffen Berger in 2005.

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