The Hershey Co. knots $1.2 billion pretzel deal

The transaction, expected to close by end of 2021, represents Hershey’s second-largest deal in its 125-year history and allows the company to broaden its snacking portfolio and reach more consumers with a broader mix of salty and sweet offerings.

“As the fastest growing U.S. pretzel brand, Dot’s Pretzels would further accelerate our success in the permissible salty snack category, along with our successful SkinnyPop and Pirate’s Booty brands,” said Michele Buck, president and CEO, The Hershey Co. “With a unique range of bold, distinctive seasonings and a flavorful crunch that creates a premium pretzel experience for consumers, Dot’s Pretzels stand apart from all other products in the pretzel category and represents 55% of the pretzel category’s growth during the past year.”

Combined net sales for Dot’s Pretzels LLC and Pretzels Inc., owned by private equity firm Peak Rock Capital, were approximately $275 million for the 12 months ended September 2021. The combination of these two strategic acquisitions is expected to be slightly accretive to reported earnings per share in 2023 and adjusted earnings per share in 2022.

Created more than a decade ago in North Dakota by founder Dot Henke in her home kitchen, Dot’s Pretzels started as a special family snack that she shared with family, friends and neighbors.

Pretzels Inc. is a co-manufacturer of pretzels for Dot’s Pretzels and several other customers and is a leading innovator in the pretzel category. Based in Bluffton, Indiana, Pretzels Inc. operates three manufacturing locations in Indiana and Kansas. Upon completion of the transactions, the three manufacturing locations will join four pretzel-seasoning facilities to be acquired with Dot’s. The acquisition of Pretzels Inc. would give Hershey deep pretzel category and product expertise and the manufacturing capabilities to support Dot's growth and future pretzel innovation as well as the continued growth in the entire pretzel category through Pretzels Inc.'s leading co-manufacturing capabilities.

“Pretzels Inc. will help us expand Hershey's snacking and production capabilities while keeping the special connection to Dot’s,” Buck added. “It will be important as we continue to grow this already fast-growing brand and create new products in the broader pretzel category.”

Food & Beverage Insider insights

Snacking is universal, but it is also highly subjective. Snacks can range from small indulgences to large, satiating meal replacements and everything in between. Additionally, the COVID-19 pandemic forever changed the landscape of snacking, as consumers balance desire for comforting foods with increased focus on personal health.

Over the past few decades, snacks have transformed from once-in-a-while indulgences to everyday necessities. In fact, the NPD Group’s recent “The Future of Snacking” report found Americans consumed almost 386 billion snacks in the last year alone. While this category still includes conventional mainstays like potato chips and cookies, consumers no longer accept that snacks must be defined as unhealthy treats.

In 2018, Hershey paid $420 million to acquire Pirate Brands, including the Pirate’s Booty, Smart Puffs and Original Tings brands, from B&G Foods Inc. The deal came less than one year after the confectionery giant purchased Skinny Pop maker Amplify Snack Brands for $1.6 billion—strengthening Hershey’s position as a better-for-you snack leader within the $14 billion warehouse snacking aisle.