Speaking to FoodNavigator-USA after Hershey completed the $397m deal to acquire ONE Brands, Burns said the two parties talked at length about how to create a win-win and avoid the “horror stories” that can arise if big CPG firms suffocate their acquisitions under the corporate umbrella.
“It’s a case of if it ain’t broke, don’t fix it. Hershey just spent a lot of money on a company that’s doing well, growing and making money, that’s what they paid for.
“So really, we’ll remain independent. It’s about me and my team knowing what we need and then resourcing that from The Hershey Company as opposed to Hershey coming in and saying, ‘Right, everyone get out of here, we’ve got this from here…’ That’s where the horror stories come in."
‘We really weren’t in official sell mode’
He added: “We really weren’t in official sell mode [when Hershey made its approach], we were growing our business and had our heads down, but a couple of parties reached out and wanted to have a conversation, and a couple of those conversations progressed, and obviously the one with Hershey went all the way to the close of a deal.
“But we wanted to make sure they could give us what we needed to get to the next level in terms of operational efficiencies, R&D, marketing support, help with distribution...
“We don’t have an extensive R&D department or the traditional big CPG marketing budget, and while we’re in around half of the grocery stores across the US and about 40% of the c stores, we don’t have a presence in the club channel. Plus we don’t really have a defined sales and marketing strategy internationally, and then there’s foodservice… so this is where Hershey can absolutely fuel the distribution growth of our company.”
He added: “E-commerce has been a hot button for Hershey’s CEO Michele Buck so we’ll partner with them for sure [around building online sales]. We do a significant amount of business in the online channel, mostly through Amazon, and we’re looking for that to grow significantly in the future.”
‘For the foreseeable future we’ll keep both offices’
Asked about the manufacturing set up, he said: “We’re happy with our current co-manufacturing set up so there’s no timetable to bring that in house with Hershey.”
As for the senior management team, he said, “We love what we do and we’ll stay together. In Charlotte, we have finance, some accounting, a distribution center, plus the founder and the small R&D team. In Boulder, we have sales and marketing and operations leads, sales services and so on, and for the foreseeable future we’ll keep both offices.
“We’ll operate much the same way Hershey operates the Amplify Snack Brands business [which it acquired in early 2018], and they stayed in Austin.”
ONE Brands could extend into new product categories
On the innovation front, ONE Brands will continue to launch new flavors, but also plans to move into new categories, he said.
“We’ve just launched our first plant-based protein bars, which should be hitting shelves in the next couple of weeks. And then after that, because the foundation of our core business is so strong, we’re looking at things with the help of Hershey around different product forms and factors, bits and bites… Could we get into high protein low sugar confection offerings, ready to drink protein beverages? Those are all on the table.”
He added: “We’re a healthy everyday active lifestyle brand. We’re not purely about muscle building. We skew more female, maybe 70:30 female to male and we reach younger consumers [than some other protein bar brands].”
While the protein bar category is competitive, it’s still growing, and ONE Brands has a brand that stands out in a crowded marketplace, he claimed.
“What we do really well through our packaging is to show you exactly what you’re getting: 20g of protein, 1g of sugar, and great taste, with bright colors on a white background and a matte finish. We really pop on shelf, whereas some other brands look like a NASCAR with 48 different messages.”
Ingredients list: Protein blend (whey protein isolate, milk protein isolate), isomalto-oligosaccharides, vegetable glycerin, maltitol, palm kernel oil, sunflower seed butter, natural flavors, nonfat dry milk, cocoa powder (processed with alkali), soy lecithin, sea salt, tapioca starch, calcium carbonate, distilled monoglycerides, sunflower lecithin and sucralose.
Will recipes change?
While many protein bars have long and complex ingredients lists in order to create an appealing taste and texture with high protein levels and very low sugar, ONE Brands core bars feature several ingredients - from maltitol and sucralose to vegetable glycerin, palm kernel oil, distilled monoglycerides, and isomalto-oligosaccharides (IMOs) – that most consumers do not have in their kitchen cupboards, acknowledged Burns.
So will some recipes change as consumers seek cleaner labels and the FDA restricts the number of ingredients that can be counted as dietary fiber on the Nutrition Facts panel (the FDA does not consider IMOs to meet its definition of dietary fiber)?
“You’ll see some changes but we’ll offer the same great taste and texture,” said Burns, who noted that above all, “consumers are looking for a great tasting protein bar, and they would rather a bit of sweetener in there than a bar with 25g sugar.”