There’s no doubt about it – consumers are seeking snacking options that bring a moment of indulgence while balancing their overall wellbeing. The numbers speak for themselves – today, ~50% of adults are looking for better-for-you (BFY) options within the confection category. However, within this space, BFY candy is under-developed compared to peer segments – less than 10% of confection category sales come from BFY products.
While we have historically offered a wide variety of choices for consumers, in February of 2021, we announced a focused strategy to lead the growth of the BFY confection segment over the next ten years.
This strategy has set a strong foundation as we embark on year two, continuing to activate across four growth levers: (1) core brand innovation, (2) partnerships & licensing, (3) research & development and (4) mergers & acquisitions.
With more than 70% of consumers looking to reduce their sugar intake, sugar reduction has become the primary focus for our BFY candy growth. In fact, within the past year we activated across each of our BFY strategic pillars to accelerate growth by addressing consumers’ desire for less sugar:
Core Brand Innovation: Last year, we relaunched our Zero Sugar line and included expanded packtypes of iconic brands, including Hershey’s and Reese’s – sales doubled, growing by $30M.We are currently leading in-market tests to refine packaging, merchandising and retail channels on 25% less sugar options including Reese’s and Hershey’s. These tests help us evaluate the incremental value a new product offering brings to our broader portfolio.
Partnerships: We’re continually evaluating partnerships with well-known BFY brands to co-develop new offerings. For example, we’re currently running an in-market test with Honest Beverages, where we’ve used Honest organic juice to make gummies. Our goal isto understand how consumers react to the Honest brand and organic fruit juice as a sweetener within confection.
R&D: Last year in partnership ASR Group, we made an equity investment in Bonumose, a start-up focused on plant-based food ingredients including rare sugar alternatives. In parallel, our team continues to use a range of sugar substitutes that deliver great taste while reducing sugar.
M&A: In June of 2021, we acquired Lily’s, specializing in low-sugar, BFY confectionary products. This acquisition was a great strategic fit for our BFY portfolio and anchored our growth in the category. In fact, in 2021, the brand experienced growth of 27% versus the previous year.
“Consumers’ decisions about eating aren’t black and white; they’re different for everyone and change throughout the day. We see growth at both ends of this continuum - from indulgent to permissible snacks – creating a ‘bow tie’ effect.”
Expanding Permissible Occasions Across Portfolio
We take pride in understanding our consumers –what, when, where and why they engage with each of our products. We're identifying opportunities across our portfolio of iconic brands to extend our reach into new occasions:
Consumers’ decisions about eating aren’t black and white; they’re different for everyone and throughout the day – some limit serving sizes, while others make trade-offs between BFY and indulgent for different occasions. We see growth at both ends of this continuum - from indulgent to permissible snacks – creating a “bow tie” effect.
Our zero sugar and reduced sugar offerings invite consumers to engage with our products across a variety of occasions – from a lunchtime treat to a post-work indulgence.
Our expansion into permissible salty snacks like Dot’s Pretzels and SkinnyPop have enabled us to experiment with ‘sweet and salty’ twists on our iconic brands, such as Reese’s Drizzled Popcorn and Hershey’s Dipped Pretzels – bringing new growth beyond the confectionary aisle.
At its core, the success to date of our BFY strategy is grounded in what we do best – staying close to our consumers, proactively identifying market opportunities, and leveraging key partnerships and acquisitions to create more moments of goodness by offering more options for more occasions.