Beef jerky is big business, and Hershey wants in.
The international chocolate giant announced on Thursday that it has agreed to purchase upscale meat snack maker Krave for as much as $300 million. The deal is unprecedented for Hershey, because it marks the first time Hershey has purchased a company that doesn't sell candy, chocolate, or other sweets.
On the surface, it's fairly easy to see why Hershey, let alone any company interested in a half decent investment, would want to acquire Krave. The high-end snack company, which prides itself on its lineup of beef jerky offerings with no artificial ingredients, closed 2014 with $36 million in sales after only five years in business. The jerky's colorful packaging, which encloses a variety of flavors, will soon be found at Starbucks restaurants across the country. And it is anticipated to continue growing—and fast. Jon Sebastiani, the company's founder, said he expects Krave to more than double its business next year.
"Krave jerky is a great fit to our portfolio," Michele Buck, president of Hershey's North America, said in a press release.
But acquiring Krave offers Hershey more than merely the opportunity to share in the company's success. It also, and perhaps more importantly, ushers the chocolate giant into one of the savory snack world's most promising foodstuffs: jerky.
The market for jerky has ballooned into a nearly $1.5 billion industry in the United States. Sales are up by 13 percent since 2013, and by 46 percent since 2009, according to data from market research firm IRI. Jack Link's, the largest jerky maker in America, now sells more than $1 billion in meat snacks each year.
The demand for dried meat has risen to such heights that it now dwarfs that of other once comparable snacks. A recent report by market research firm Euromonitor found that jerky outsells seeds, party mixes, and pita chips—combined.
The rise of dried meat is in part the result of a general uptick in snacking among Americans. The U.S. snacks business, which includes not only jerky, but also chips, bars, nuts, and other fare, is now a $120 billion behemoth. Pepsi now relies on snacks—not soda—for growth. And it's easy to see why. A recent survey by Nielsen found that one in ten people in this country say they eat snacks instead of meals, a number which the research company expects will increase.
But jerky's popularity also owes a great deal to this country's obsession with protein. More than half of Americans say they want more of it in their diet, and they have proven that the talk isn't cheap. The protein shake business has become a behemoth. So too has the protein bar market, which was already worth more than $500 million in 2013. Sales of health and wellness bars, which often dangle high protein content, are growing more than twice as fast as the overall food industry.
Beef jerky, which is high in protein, low in calories, highly portable, and can last for a long time, has benefited greatly from its ability to double as both a practical and healthy snack.
"A recent trend among consumers of viewing protein as an effective appetite suppressant and energy booster has further helped jerky to be perceived as a smart snacking option," Euromonitor notes in its report.
Hershey's acquisition of Krave is a vindication of both beef jerky's popularity and still nascent potential. The move creates a natural avenue into a coveted food space the company has yet to explore: salty snacks. It also allows Hershey to experiment with a brand that is recognized for eschewing price point for the quality, which, though the company might disagree, isn't exactly what people associated with its chocolate bars.
It's unclear what a fancy new beef jerky business will mean for Hershey's core offerings, but it's not too early to guess something a bit saltier, with a bit (or a lot) more protein, might find its way onto checkout shelves around the country with Hershey's emblem. The company, for its part, hasn't been shy about alluding to the possibility. "We know consumers have an interest in portable and protein-based nutrition," Michele Buck, president of Hershey North America, told the Associated Press.
And who knows? Maybe that's just what Hershey's needs. The maker of Kit Kat bars, Reese's Peanut Butter Cups, and York Peppermint Patties has had trouble getting people to impulse buy its candy as checkout processes grow more efficient and increasingly automated. Beef jerky, on the other hand, which is at the intersection of so many food trends, might convince a few more people to stop and notice.