Reuters — Chocolate maker Hershey Co. said it would buy Krave Pure Foods Inc. to enter the fast-growing meat snacks market, after higher demand for meat and bakery snacks hurt chocolate sales in the fourth quarter.
The maker of Hershey’s Kisses and Reese’s Peanut Butter Cups also cut its sales and profit forecast for 2015, citing a stronger dollar and higher spending on advertising and promotions.
Hershey’s sales have taken a hit since it raised prices by about eight per cent last year as cocoa and dairy prices soared. Rivals Mondelez International and Mars Chocolate North America did the same.
Hershey said on Thursday it now expects net sales to rise 5.5-7.5 per cent this year, down from its previous forecast of seven to nine per cent. It also trimmed its adjusted earnings growth forecast to eight to 10 per cent from nine to 11 per cent expected earlier.
The company did not disclose the price it would pay for Krave, a maker of healthy beef, turkey and pork jerky snacks.
Reuters reported on Tuesday that Hershey was in late-stage talks to buy Krave in a deal valuing it at $200 million-$300 million (all figures US$).
Hershey reached a settlement last week with Let’s Buy British Imports to prevent the import of products similar to brands such as Cadbury’s Dairy Milk and Kit Kat, which Harshey’s sells in the U.S.
The move has drawn criticism from British expatriates, among others.
Hershey’s net income rose to $202.5 million (91 cents per share) in the fourth quarter ended Dec. 31, from $186.1 million (82 cents) a year earlier. Excluding items, the company earned $1.04 per share.
Revenue rose 2.7 per cent to $2.01 billion. Analysts on average had expected earnings of $1.06 per share on sales of $2.07 billion, according to Thomson Reuters I/B/E/S.
— Reporting for Reuters by Sruthi Ramakrishnan in Bangalore.