Campbell, Hershey bet on salty snacks

In a packaged-food industry suffering from weak demand and shifting consumer tastes, there’s still one safe bet: Salty snacks.

Potato chips, popcorn and other savoury fare have remained strong sellers, even as other categories languish. And that’s driving companies’ M&A strategies: Campbell Soup and Hershey both announced deals on Monday that give them well-known savoury brands.

Campbell is acquiring Snyder’s-Lance for about $4.9 billion in cash, adding Cape Cod potato chips, Snyder’s pretzels and Pop Secret popcorn to its portfolio. 

Hershey, meanwhile, is snapping up Amplify Snack Brands, spending roughly $921 million for a business that’s best known for SkinnyPop popcorn.

It’s no coincidence that the two deals are targeting the same category, said Ken Shea, an analyst at Bloomberg Intelligence. “It’s a group that’s been growing consistently,” he said.

Campbell and Hershey occupy different parts of the supermarket, but their core products are suffering a similar form of stagnation. 

Canned soup has lost favour with many Americans, sending Campbell into a three-year slump. At Hershey, management is grappling with sugary treats becoming more taboo — especially its hallmark milk chocolate.

Convenient snacking

As tastes change, the 10 largest packaged-food companies in the US have seen about $17 billion in revenue evaporate over the past three years. Consumers are seeking out more fresh food, which is typically found on the perimeter of supermarkets. Breakfast cereal and other long-time staples are increasingly getting left out of grocery carts.

Though potato chips and pretzels aren’t typically viewed as healthy, they’ve remained popular with Americans seeking convenience and on-the-go snacking. And the category of pre-popped popcorn, such as SkinnyPop, has surged in recent years.