• 🥨Hershey: Dot’s Pretzels, “Satiating” Salty Snacks Will Carry The Category
• 🚚KeHE Now Shipping To CVS
• 🤔 Report: Ozempic, Wegovy May Benefit Food Manufacturers
• 🍫 Consumer Reports Says A Third Of Chocolate Products Contain Heavy Metals

The Hershey Company saw net sales rise 11.1% year-over-year to over $3 billion during Q3 – driven by seasonal demand and the impact of its new Salty Snacks ERP system, according to an earnings report released this morning. The company has reaffirmed its full-year guidance after results surpassed analysts’ expectations.

Here’s a brief overview of the numbers: 

• Organic, constant currency net sales increased 10.7%, driven primarily by price realization. 
• Volumes increased slightly (+0.9%), while prices increased 9.8%. 
• Gross margin gained over 4 points y/y, rising to 44.9% in the quarter. 
• Reported net income rose 29.9% to $518.6 million, or $2.52 per share-diluted.

The company’s Salty Snacks segment (composed of Dot’s Pretzels, Skinny Pop, Pirate’s Booty and more) generated $345.2 million in sales – a 25.5% increase – driven by volume growth (+22.2%) and net price realization. 

The segment's sales growth in MULO+C retail was flat, with SkinnyPop’s takeaway dropping 3.9% due to slowdown in consumer popcorn demand, Hershey claimed. However, Dot’s Homestyle Pretzels saw an increase of 17.6%, resulting in a 160 basis point pretzel category share gain. Hershey purchased Dot’s (which included the company’s four pretzel seasoning facilities) as well as its copacker, Pretzels Inc., for $1.2 billion in 2021. 

According to Michele Buck, president and CEO of The Hershey Company, pretzels and other snacks like meat sticks and tortilla chips are expected to capture consumer demand better than aerated snacks such as rice cakes and popcorn. 

“We know that affordability and value are of increasing importance to consumers. We’re also seeing them prioritize some of the more satiating snacks,” Buck told investors during this morning’s earnings call. “So as we look at our business, we’re seeing a lot of strength in pretzels in the category as well as our Dot’s distribution opportunities.” 

A sizable opportunity also exists for Hershey to capitalize on growth in the sweet segment through higher levels of innovation. 

“Some of the capacity that came online this year has been helpful to us relative to the seasons and better being able to take full advantage in that area in that area that will be a benefit next year,” she said. 

Check out the full recap today on NOSH.

KeHE announced this week it has brought on CVS as its newest retail partner – opening up access to over 9,000 new points of sale for brands selling through the natural, organic and specialty distributor. The expansion also brings a new channel opportunity beyond traditional grocery to KeHE’s 4,100 suppliers and 8,500 brands. 

CVS has been steadily realigning its food and beverage assortment since expanding its Healthy Food Initiative in 2016. It began swapping out junk food items for better-for-you products around checkout counters and later redesigned store layouts to elevate the presence of health and wellness products like nutrition bars.

KeHE began building up operations to support the CVS partnership earlier this year, expanding its team with new account analysts and managers. According to a representative for KeHE, the distributor made initial shipments to CVS stores this month.

Rising consumer demand for appetite suppressant GLP-1 drugs like Ozempic and Wegovy may actually present fruitful opportunities for food manufacturers, according to a report by Reuters. 

• Earlier this month, Walmart reported a slight drop in food purchases by GLP-1 drug users.
• To prevent weight loss drugs from eating into sales, last week Nestlé announced plans to develop “companion products,” which may help “limit the loss of lean muscle mass” and “rapid regain of weight.” 
• Earlier this week, Simply Good Foods took similar action with plans to revive legacy nutrition brand Atkins for the Ozempic Era.
• According to the Reuters report, considering product initiatives like these and the limited availability of GLP-1 drugs at the moment, some investors remain hopeful the “miracle drug” won’t damage the industry in the long term. 

“The companies most at risk could be those dedicated exclusively to ‘junk food,’ or restaurant chains that don’t offer much in the way of alternatives,” John Plassard, senior investment specialist at Nestlé investor Mirabaud Group, said in the report.

The D’Amelio’s, also known as the “first family of Tik Tok,” announced the official launch of Be Happy Snacks popcorn – available exclusively at Walmart.  

• The line contains only “natural ingredients” with no artificial flavors or colors and comes in Cotton Candy, Maple Bacon, Parmesan Garlic, and Nice Spice flavors.
• The brand name, Be Happy Snacks, is a nod to the 2020 song by daughter Dixie D’Amelio who previously told SiriusXM that the song is meant to be about not “always need[ing] to pretend life is so perfect and [you] can have a bad day”... (and, we guess, eat your feelings with popcorn too?) 
• Be Happy, the first release under D'Amelio Foods, is part of “cross-platform company” D'Amelio Brands, and was developed in collaboration with creator-focused brand agency Trusted Influence and with backing from the Fifth Growth Fund. 

Sure, The D’Amelio’s have plenty of fans, but Walmart also is a core retail partner for the Jonas Brothers’ Rob’s Backstage Popcorn – which originally launched exclusively in the mass retailer last year. Parent company The Naked Market has since spun off Rob’s as a separate brand and brought in $7 million in new capital for the popcorn enterprise. 

But as the two prepare to meet face to face on Walmart shelves… will there be dance off in the snack aisle? 

Get up to speed on D’Amelio Foods.

Consumer Reports (CR) is still testing chocolate for heavy metals and the results won’t make you cuckoo for any kind of cocoa. The organization published its most recent tests this week and found “concerning levels of lead in Hershey’s cocoa powder and milk chocolate.” CR is urging the chocolate company to take action on reducing the levels of toxic metals from its products.

• The new report tested multiple chocolate brands and products spanning seven categories – from bars and powders to cake mixes.
• The report comes nearly a year after CR first reported that many conventional and organic chocolate products contain concerning levels of lead and cadmium.
• Dark chocolate and cocoa powder tend to have higher levels of lead and cadmium due to the large volume of cacao used to produce these varieties. 
• Cacao absorbs these metals during various stages of the production process, including prior to beans being processed and particularly during the drying stage.
• In the current test, 16 of the 48 products had amounts of either (or both) lead and cadmium above CR’s levels of concern.

Dive Deeper: Study Sparks Debate Over Heavy Metals in Dark Chocolate