Snack Makers Get Healthy -- WSJ

Hershey and Mondelez keep focus on sweets but try to widen base with quinoa, SkinnyPop

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 29, 2018).

Hershey Co. and Mondelez International Inc. are betting that a turn toward healthier foods can still prompt Americans to snacking on their products more often.

The food makers, which make most of their money selling indulgences like Hershey Kisses and Oreo cookies, have managed to preserve sales of their most well-known brands in recent years, while also introducing more nutritious snacks.

In the coming week investors will get the latest look at whether both companies are maintaining that balancing act.

For both companies, a focus on snacks has turned out to be a source of strength. Sales of salty snacks in the U.S. rose 3% last year, while candy sales rose 1.3% and cookie sales were up 0.9%. Meanwhile, total packaged food and beverage sales excluding alcohol inched up 0.3%, according to Nielsen.

Mondelez is expected on Wednesday to report a 10% rise in earnings per share for 2017, and annual sales of $25.78 billion, which would be 0.6% less than 2016. Hershey is projected on Thursday to report a 1.3% rise in sales for 2017 to $7.54 billion, and a 9% increase in earnings per share.

Executives at both companies have said consumers want more nutrition in their snacks, because they are increasingly eating them in place of meals. The $100 billion U.S. snack market is growing faster than packaged-food sales over all, according to market research firm Nielsen.

"The confluence of snacking plus health and wellness -- that is more where the action is," said Jeff Robards, head of North America consumer foods for Alantra investment bank.

Mondelez has introduced savory snacks with simple ingredients, such as Good Thins baked chickpea crackers and Vea quinoa crisps. The company said Vea was part of a push to be the global leader in "well-being snacks."

Hershey has acquired snack companies including Amplify Snack Brands, the maker of SkinnyPop popcorn, which Hershey said it would buy last month for $1.6 billion. Hershey Chief Executive Michele Buck said the deal was part of her plan to remake the 100-year-old candy icon as a broader snacking company.

In 2016, Mondelez made a bid to buy Hershey for $23 billion, which would have created the world's largest candy company. But Hershey said its board unanimously rejected the offer, and a couple months later, Mondelez ended its pursuit.

Since then, Hershey and Mondelez have both drawn new chief executives. Hershey's Ms. Buck took over in March, while Dirk Van de Put took charge at Mondelez in November. The two leaders are trying to expand their offerings while the packaged-food industry struggles with losing sales to fresher options and trendy smaller brands.

On a conference call last month, Ms. Buck stressed Hershey's commitment to both its older, indulgence brands and new, nutritious snacks. "We are certainly focused on and love our current portfolio within core confectionery," she said. "And we are also looking at opportunities across the board to participate more broadly in savory, in better-for-you, et cetera."

Write to Annie Gasparro at annie.gasparro@wsj.com

(END) Dow Jones Newswires

January 29, 2018 02:47 ET (07:47 GMT)