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Hershey (HSY) Buys Lily's, Boosts Better-For-You Brand Portfolio

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The Hershey Company (HSY - Free Report) is focused on strengthening its business on the back of strategic acquisitions. Keeping along these lines, the company concluded the previously-announced (on May 18, 2021) acquisition of Lily's, a leading better-for-you (BFY) confectionery brand. We note that the transaction was priced at $425 million.

Lily's offers less-sugar items like dark and milk chocolate style bars, baking chips and peanut butter cups among others, which are available across various retailers nationwide. Well, the buyout is in tandem with Hershey’s focus on creating an impressive BFY confection portfolio as part of its multi-pronged better-for-you snacking strategy.

In February 2021, Hershey announced core strategies to expand the BFY chocolate category. In line with the strategy, the company is creating an impressive portfolio of lower sugar, organic and plant-based alternatives. Incidentally, this long-term strategy is based on key pillars including robust innovation, research and development as well as partnerships, licensing & M&A among others.

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What Else Should You Know?

Hershey has long been undertaking buyouts to augment portfolio strength as well as boost revenues. In this regard, the company acquired ONE Brands, LLC in September 2019 to   solidify its footing in the snacking category. Prior to this, the company acquired Pirate Brands in October 2018 to bolster its snacking business. Additionally, it is gaining from Amplify Snack Brands, which was acquired in January 2018, to expand in the snacking category. During first-quarter 2021 earnings call, management highlighted that its Amplify business is performing well, with retail sales increasing 9% year-to-date period ending April 18.

Moreover, the company’s core brands — Hershey’s, Reese’s, Hershey’s Kisses, Jolly Rancher, Brookside, Sofit and Ice Breakers — have been growing strongly on the back of advertising investments, in-store merchandising as well as programming and innovation. In fact, Hershey regularly brings innovation to its core brands to meet consumer demand and needs that are not addressed by its current portfolio. In its last earnings call, management highlighted that it is on track with several innovations. In this regard, the company’s take home items like Kit Kat Thins and our Zero Sugar products are being rolled out. Also, the company is committed toward supporting its brands through solid media marketing. An important strategy of the company is to create a unique and holistic portfolio for every season, which can meet consumers’ seasonal shopping needs.

Notably, shares of this Zacks Rank #3 (Hold) company have gained 15% so far this year compared with the industry’s growth of 14.6%.

3 Key Food Bets

Darling Ingredients Inc. (DAR - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 29.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Medifast, Inc. (MED - Free Report) , currently sporting a Zacks Rank #1, has a trailing four-quarter earnings surprise of 12.7%, on average.

Nomad Foods Limited (NOMD - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 10.3%, on average.

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