Hershey snaps up Jolly Rancher maker Allan Candy

05-Dec-2014 - Last updated on 05-Dec-2014 at 10:26 GMT

Allan Candy already produces Hershey's Jolly Rancher hard candies and Lancaster caramels, but also sells its own brands.

Hershey has acquired its contract manufacturer for Jolly Rancher and Lancaster brands in North America Allan Candy, which also owns a series of Canadian confectionery brands.

Canada is Hershey’s second largest sales market behind the US and the deal helps third place Hershey to narrow the gap on second place Nestlé in the Canadian confectionery market.

Adding new brands

“The acquisition of Allan Candy extends Hershey’s ability to serve consumers across Canada by adding a number of iconic Canadian confectionery brands to our portfolio,” said Rohit Grover, vice president of Hershey Canada.

Ontario based-firm Allan Candy produces brands such as Allan, Big Foot, Hot Lips and Laces for the Canadian market, but over half of its manufacturing capacity is used to produce Hershey brands Jolly Rancher hard candy and Lancaster caramels for the North American market.

In October last year, Hershey launched Lancaster Soft Caramel Cremes in the North America; six months after the company initially introduced the brand in China.

Canadian market shares

Allan Candy is Canada’s 16^th largest confectionery firm with a 0.4% share in 2014, according to data by Euromonitor International.

In Hershey’s release, it said that Allan Candy was Canada’s leading novelty chocolate and candy cane producer.

Euromonitor data showed that the Canadian confectionery market in 2014 was led by Mondelēz International with a 19.5% share, followed by Nestlé on 10.9%. Before the Allan Candy acquisition, Hershey held a 10.5% share.

Euromonitor estimates 2014 retail value sales of $3.6bn in the overall Canadian confectionery market and forecast a 1.6% compound annual growth rate (CAGR) in the next five years, with chocolate the main driver.

Allan Candy operates a 170,000 sq ft plant in Granby, Canada. The facility will join Hershey’s manufacturing network in Canada, which includes two other factories. Hershey now employs around 900 people across the country.

Last year, Hershey pleaded guilty to conspiring to fix chocolate prices in Canada in 2007 and was fined $4m.