Nestlé decided to sell its US confectionery portfolio in June last year, which includes Butterfinger, BabyRuth, SkinnyCow and Raisinets, due to low market share. It also discontinued its membership at the National Confectioners Association (NCA) at the end of 2017.
Nestlé’s said it does not “comment on rumors,” but the company’s spokesperson Edie Bruge said a deal is expected to happen in the first quarter of 2018. Several companies have reportedly joined the bidding race, such as Hershey, Ferrara and Leaf Brands.
Ferrara, however, was acquired by Nutella and Tic Tac breath mints maker Ferrero in October of 2017. Leaf Brands did not immediately respond whether it is in the final process to compete for the Nestlé deal.
Hershey, on the other hand, has been on an acquisition spree recently to tap into healthy snacks space, hoping to become a snacking powerhouse in the future. Most recently, it acquired Skinny Pop owner Amplify Snacks, putting the company “second to Frito-Lay,” according to a Euromonitor analyst.
Sources, who are familiar with the matter, told CNBC, Ferrero “appears to be the front-runner because it is more willing than Hershey to be aggressive on price.” However, it may take another week for Nestlé to make a final decision.
Hershey’s advantages
Despite an earlier report that showed Ferrero may be more competitive than Hershey in purchasing Nestlé’s candy business, consumer analyst at Edward Jones, Brittany Weissman, said Hershey has its own advantages too.
“Hershey has been buying more snacking brands as they try to broaden their exposure in the ‘snackfection’ category that combines salty and sweet snacks together… but they have commented recently they would still be interested in doing the right deal in the confectionery space,” she said.
Weissman added Nestlé’s candy brands could also give Hershey “scales and synergies.”
“Hershey does a really good job of leveraging their brands across multiple products. With their Reese’s brand, for instance, there is a lot of innovation behind the peanut butter cup. You also see them in different snack mixes the company put together.”
“If Hershey has the Butterfinger and Crunch brands under its roof, it can only strengthen them with innovation… It would be a big win for Hershey,” said Weissman.