KRAVE founder Jon Sebastiani - who spoke to FoodNavigator-USA on camera at the Winter Fancy Food Show this month (click HERE; KRAVE interview starts at 3:30 mins) - will continue to lead the company as president of KRAVE, which will be run as a standalone business within Hershey North America and generated net sales of $35m last year.
One of the most successful recent entrants to the US food and beverage market, KRAVE is marketed more like artisan coffee, chocolate or fine wines, and comes in gourmet flavors from ‘basil citrus turkey’; and ‘black cherry barbecue pork’; to ‘pineapple orange beef'.
Sebastiani has also introduced an artisanal line exclusively for Whole Foods featuring flavors such as Chardonnay Thyme, and Sesame Ginger, along with limited edition super-premium products such as Cabernet Sauvignon Balsamic Blackberry beef jerky.
‘The essence of what KRAVE is trying to do is reintroduce jerky as a healthy snack’
If the latter sounds more like something you'd find at a fancy restaurant than a gas station, that’s because to Sebastiani - who worked in the family wine business in Sonoma, California, before turning his entrepreneurial talents to meat snacks in 2009 - premium jerky is every bit as enticing as good wine.
Unlike the dry, leathery, additive-laden trucker’s fare some jerky fans have become accustomed to, KRAVE has attempted to redefine what jerky is, Sebastiani told us: “The first thing we are trying to do is actually make jerky taste good, which compared to what was previously produced is actually a major step forward.
“But really the essence of what KRAVE is trying to do is reintroduce jerky as a healthy snack. Protein has become a very important snacking ingredient … and this offers more protein and a third of the sugar than many bars out there, so we like to think we’re in a jerky renaissance right now.
“The texture of our product is marinated in such a way that it’s soft and tender rather than like leather that might pop a tooth if you eat it.”
What’s incredible now is that the category is growing at 25-30%
The fact that more players had piled into the premium end of the jerky market since KRAVE moved in is a “great thing”, claimed Sebastiani.
“The rising tide lifts all boats. There are new brands that are also promoting this healthy snacking with jerky and [in response] the existing big brands have pivoted a little bit, taking out sodium nitrates, high fructose corn syrup…
“What’s incredible now is that the category is growing at 25-30%.”
When he started, Sebastiani deliberately steered clear of c-stores and gas stations and instead targeted natural retailers such as Whole Foods, then drugstores (CVS), and finally mass grocery and club stores as word started to spread (Target, Costco, Kroger, Meijer). He also struck deals with airlines (Virgin Atlantic), posh hotels, gyms, wine stores and the staff cafes at Google, Twitter and Microsoft.
The marketing and PR also reflected the brand's women-friendly, all-natural, healthy image, with mentions in leading women’s magazines from Oprah to Glamor and Self, Sebastiani told us in late 2013: "In the channels that KRAVE is in, we can draw two important and distinct data points: First, KRAVE is incremental to the category, often bringing women and children into the space; and second, where KRAVE is sold, overall category growth is up in the mid-double digits."
Meanwhile, KRAVE was generating "tremendous growth" in channels that are not picked up by IRI, such as airlines, sports arenas, hotels, foodservice, and corporate cafeterias, added Sebastiani, who received a "significant minority growth capital investment" from private equity fund Alliance Consumer Growth in early 2013.
Premium jerky is the fastest-growing sub-segment of the estimated $2.5bn U.S. meat snacks category, said Hershey in a statement announcing the deal this morning: “The overall meat snacks category is growing at a double-digit pace with a compounded annual growth rate of about 10% from 2010-2014.
“The better-for-you, premium subset of the category, where KRAVE participates, increased at a rate of almost four times greater than mainstream brands.”
Tapping into Hershey’s resources will help boost distribution and awareness, said Hershey, which “intends to leverage its best-in-class supply chain capabilities, consumer insights and retail relationships to accelerate growth and access to KRAVE products”.
It will also use its marketing clout to work with KRAVE’s team to further build the brand, said Hershey’s North America president Michele G. Buck:
“The KRAVE brand delivers on portable and protein nutrition while also understanding consumers’ food preferences, including the desire for simple ingredients and transparency, something that is also a part of Hershey’s strategic vision.”
KRAVE, preserved with sea salt and celery powder - has a shelf-life of less than a year versus the standard of nearly two years - and is made with whole muscle meat instead of meat scraps, marinated for 24 hours and baked, so it remains moist and tender. The products are also free of gluten and high fructose corn syrup and have no added nitrites or MSG.
Hershey's new products for 2015
Hershey announced the KRAVE deal after posting its fourth quarter earnings, which fell below Wall Street expectations (net income was $202.5m on revenues up 2.7% to $2.01bn.
In 2015, Hershey will launch several new products including Kit Kat White Minis, Hershey’s Caramels, Ice Breakers Cool Blasts Chews, Reese’s Spreads, Snacksters Graham Dippers and "some other yet to be announced new candy and snacking products", said CEO John Bilbrey.
Click HERE to read our profile of KRAVE.