barkTHINS - irregular strips of dark chocolate ‘bark’ with fairtrade sugar, cocoa butter and chocolate liquor covered in nuts, seeds, dried fruit and grains in re-sealable packs – first hit shelves in August 2013, were an immediate hit, and are now available nationwide in chains from Whole Foods to Target, Costco, Kroger, and Safeway. Annual net sales in 2016 are expected to be in the $65-75m range.
Speaking to FoodNavigator-USA last year, founder and CEO Scott Semel said: “I’ve been working in this industry for a long time and to go from start-up to scale in the timeframe that we have with barkTHINS, I think only a handful of other brands have done it. It just took off like a rocket ship.”
Just three months after barkTHINS hit shelves, Semel was approached by Alliance Consumer Growth (a private equity firm that has invested in brands from KRAVE to Suja Juice) and in March 2014, it took a minority stake in the business.
I think what makes it work is that it is unique, yet familiar
While you could argue that all chocolate is ‘snacking’ chocolate, that’s not how consumers or retailers necessarily see it or merchandise it, observed Semel, who said simply adding on-trend ingredients (almonds, quinoa), presenting the chocolate in individual pieces, and putting it into re-sealable bags (4.7oz packs and 2oz single-serve packs) has effectively created a new category.
“I think what makes it work is that it is unique, yet familiar. People love the taste, the authenticity and the fact it consistently delivers from a value standpoint [the 4.7oz bags typically retail at $4.49-$4.99].”
"barkTHINs is a very viable consumer proposition that's grounded in the very on-trend area of clean label and fully sustainable profile. It's a less sweet kind of taste profile. So we think we have the opportunity to take a great proposition and leverage our Hershey muscle and scale to expand distribution to make it more available, and also to increase brand awareness.
"I would liken it somewhat to Brookside, and what we did with Brookside when we purchased that. It allows us strategically to expand into mass premium, to have a product that is very well-liked by Millennials, and to capture that opportunity to just expand beyond that."
Michele G. Buck, president, North America, Hershey (Q1, 2016 earnings call)
Michele G. Buck, president, North America, at Hershey, said “leveraging Hershey’s scale at retail” would give the brand a significant boost.
She added: “Since its launch in 2013, barkTHINS has quickly become a favorite snack brand due to its commitment to using simple ingredients, fair trade cocoa, non-GMO certification, and no artificial flavors or preservatives. barkTHINS is a very attractive and uniquely crafted brand that essentially created a new form of chocolate snacking.”
Hershey Q1 results
The acquisition was announced as Hershey reported its Q1, 2016 results. Adjusted earnings were $1.10 a share, just ahead of analysts' expectations, while revenues slipped 5.6% year-over-year to $1.83 billion, below forecasts of $1.9bn.
In North America, Hershey's biggest market, net income declined 4.5% to $529.4m on net sales down 4.3% to $1.63bn. Net sales of Hershey’s 'International and Other' segment dipped 15.4% to $195.3m due to weaker sales in China and India.
"We've done some extensive R&D and consumer market research over the last year that will result in a meaningful new product launch by year-end. And the barkTHINS acquisition will give us a chocolate snacking platform, or, as we like to call it, snackfection, to build upon.
"We're focused on organic innovation and growth, as well as acquisitions that meet the needs of the candy loyalist; CMG's [candy, mint and gum] variety-seeking consumers who like to try new things and consumers looking for better-for-you reassurance."
John Bilbrey, president, CEO, chairman, Hershey (Q1, 2016 earnings call)