Snack and confection giant Hershey spent much of its 127-year history firmly entrenching itself as a go-to option for consumers looking to cure an afternoon or evening sweet tooth.
But as shoppers have made snacking a bigger part of their daily routine, often at the expense of a meal, the maker of Reese’s, Kisses and Almond Joy discovered much of the increase was coming from so-called impulse snacks — candy, chips and other offerings consumed within an hour after they’re purchased.
At the same time, the rate of impulse snacking was higher in the morning than at other times of the day when Hershey’s core confection products and snacks were traditionally more dominant.
The discoveries soon prompted Hershey, the largest U.S. confections company, to take a deeper look at its portfolio. It didn’t take long before the company decided it could tap into its expertise in indulgent snacks with chocolate, peanut butter and other ingredients to capture a bigger portion of morning impulse snacking.
“We see this as a potential growth lever and way for us to potentially capture more total snacking occasions across all dayparts,” said Dan Mohnshine, head of strategic growth platforms at Hershey.
The storied Pennsylvania company has previously leveraged its brands in the morning through a series of partnerships, lending its name in 2020 to General Mills for Hershey, Reese’s and Jolly Rancher cereals. It has worked with Mrs. Freshley’s on chocolate cupcakes, collaborated with Dunkin’ on drinks and doughnuts flavored with Kit Kat, Heath and Hershey’s Cookies ‘n’ Creme candies, and most recently partnered with Krispy Kreme on s’mores doughnuts.
Hershey also had observed that many people consume Kit Kat with their coffee.
Mohnshine said the expanded use of Kit Kat, the success of the partnerships and internal consumer research gave Hershey more confidence that it could expand its presence in the morning. While collaborations remain a key tool, Hershey’s decision to develop and manufacture its own products will help it do so more quickly.
In an August 2020 survey, Hershey found 83% of consumers ate dessert before noon in the past month. A month later, Hershey introduced Reese’s Snack Cakes, a soft-baked chocolate cake with peanut butter creme and covered in milk chocolate. The product, recently expanded to included a line with crunchy peanut butter, was aimed at consumers craving a mid-morning snack. And this August it debuted a Reese’s snack bar to compete in convenience stores with similar offerings from cereal makers.
Mohnshine would not publicly discuss launch dates for the new products or what items the company would roll out, but he said Hershey plans to target bakery offerings like snack cakes, cupcakes, doughnuts and muffins. The CPG would most likely introduce the products under brands within its portfolio that have the broadest appeal like Hershey and Reese’s, minimizing the inherent risk that comes from expanding into a category.
“Based on the success of [the Reese’s Snack Cakes] we’re continuing the process of evaluating which categories, which brands, and how do we translate the indulgent credentials that our chocolate portfolio has to other categories that have a greater presence in the morning,” Mohnshine said.
Anthony Campagna, director of research at ISS ESG, said the decision to “think a little bit more outside the box” is already “paying dividends” by helping Hershey increase sales, boost margins and access consumers who are staying closer to home.
“They have such strong brand recognition and moving into a space where there’s a new decision to buy a new product for a new need, they certainly capitalize on that really well,” Campagna said.
The expansion into the morning also is particularly attractive for Hershey because new product launches have a lesser chance of cannibalizing existing offerings since they would be located in a different part of the store versus the traditional confection aisle. In addition, the products would provide different experiences and textures for the consumer, such as a Reese’s Snack Cake instead of a traditional Reese’s confection item like a peanut butter cup.
Erica Norton, senior director of consumer insights at Hershey, said people in the past traditionally viewed the morning as a time to focus on eating healthier and getting nutrients, with a greater permission to indulge later in the day. In recent years, consumer sentiment has started to change, with indulgent consumption playing more of a role earlier in the day.
“More and more, there has been just the presence of sweeter types of snacks in the morning,” Norton said, noting an increase in the popularity for things like cookies and even chocolate. “We have brands that can play there, and so we felt like we had an opportunity to expand our occasions further.”
The expansion comes as part of a broader shift by Hershey CEO Michele Buck to make inroads into other categories that would provide shoppers with more opportunities to consume her company’s products.
Since Buck took over in 2017, Hershey has worked to create a “snacking powerhouse” by accelerating growth in the company’s hugely profitable confectionary business and expanding its portfolio into new snack offerings.
“It’s about keeping everything that we have that is wonderful [at Hershey] and then how do we take it to the next level because the world is changing more rapidly than ever before. The marketplace is changing. Consumers are changing,” Buck said in an interview last year. “You have to stay ahead of it.”
Hershey, for example, is focusing more attention innovating its core confection products through low- or no-sugar, organic and bite-size offerings in an effort to grab a larger share of the better-for-you snacking category. As part of that push, Hershey announced last month it was trialing a plant-based chocolate bar in some markets called Hershey’s Oat Made. Only 6% of candy, mint and gum sales come from products defined as better for you, or about $1.3 billion per year, according to IRI data cited by the company.