Hershey acquires Krave Jerky

SONOMA ­– Krave Jerky, a Sonoma-based company that had 2014 sales of $36 million, on Jan. 29 confirmed it is being sold to The Hershey Company.

“It’s a deal,” Jon Sebastiani, who founded Krave in 2009, told the North Bay Business Journal. “We’re very proud. I’ve been on the phone this morning with the Washington Post, the New York Times, Fortune, Forbes. It’s incredible. CNBC did a piece.”

The purchase price wasn’t disclosed.

“Hershey plans to leave this company in Sonoma and build around it,” he said.

He will continue to run Krave from its Sonoma headquarters, currently with 20 employees there and 72 overall, and report to Michele Buck, Hershey North America president, based in the company’s headquarters in Hershey, Penn.

“Hershey recognizes the unique DNA of this community, and our culture of forward-thinking innovation,” Mr. Sebastiani said. “The plan in place today is, I’m going to be here. My whole team’s going to be here. We’re staying in Sonoma.”

“Krave jerky is a great fit to our portfolio,” said Ms. Buck in an interview with the Associated Press.

“They recognize the growth of Krave, the growth in the category,” Mr. Sebastiani said. “They bring a world-class infrastructure and supply chain to us. They have a world-class sales team. When we think about our future at Krave, we want to be a number-one player. Our product with Hershey in every way will continue to grow the brand and the category.”

Beyond its Hershey bar and kisses, the Hershey company owns Reese’s, Twizzlers, Kit Kat, Almond Joy and Mounds. Will the Krave acquisition lead to a marriage of chocolate and meat? “I don’t think anybody knows at this point,” Mr. Sebastiani said. “We played with it before any discussions with Hershey happened. We dipped our product in chocolate with sea salt on top. It’s quite tasty.”

Hershey reported 2014 fourth-quarter revenue of $2.0 billion, up from $1.96 billion in 2013 but below analysts’ expectations. Full-year revenue was $7.4 billion in 2014 compared with $7.1 billion in 2013, an increase of 4 percent. The company has market capitalization of about $23 billion. With its corner of the candy bar market mature, Hershey has been in an acquisition mode in portions of the snack food market where faster growth can occur.

In September 2014, Hershey Netherlands purchased 80 percent of Shanghai Golden Monkey Food Co., and is expected to complete acquisition of the snack food company in less than a year for a total estimated price of $577 million.

“This strategic acquisition advances our international growth agenda and builds on our commitment to the China market by providing world-class, quality products to Chinese consumers,” said Humberto P. Alfonso, president of Hershey International, in an interview in the business press.

Mr. Sebastiani has yet to discuss with Ms. Buck the prospect of selling Krave products in China. “We haven’t had time yet to collaborate on ultimately what will happen. We already export in a pretty meaningful way to Canada,” he said. “There are logistical issues to exporting to Europe and Asia, but with the Hershey company now, we will certainly have the infrastructure to be able to do that, but I can’t comment on timing or strategy. Hershey is a global company, globally thinking.”

In an interview with the North Bay Business Journal in October 2014, the then-owner and Krave creator described his company’s product vision beyond the jerky lines he already sells in Whole Foods, 7-Eleven, Safeway, Target and Kroger markets. Costco sells one-pound bags of the jerky, and single-serving bags are available in hotel mini-bars such as Four Seasons and on Virgin America airline, as well as in corporate cafeterias at Google, Lululemon and Nike.

Mr. Sebastiani sees Krave as a base for snacks made from fruit, vegetables and nuts, beyond meat. “We offer a wide range of flavors,” including cabernet-rosemary and chardonnay-thyme blends made just for Whole Foods. “Who would have thought you would have jerky with a wine-based marinade.”

He developed prototypes of meat-based snack bars that would compete with mostly cereal-based bars made by Clif Bar, Kellogg’s and General Mills.

Hershey has extensive distribution throughout the United States and in an estimated five dozen countries, and could take Krave products quickly to new markets.

Hershey had a string of chocolate company acquisitions a few years ago, including Berkeley-based ScharffenBerger and San Francisco-based Joseph Schmidt Confections in 2005, and Dagoba Organic Chocolate, headquartered in Ashland, Ore., in 2006.

Krave Jerky products are made in five production facilities in the United States. Production, which turns two pounds of raw meat into one pound of Krave jerky, is done at an original local plant in Fairfield, and by co-packers in Idaho, Salt Lake City and Virginia, a plant that serves East Coast markets. A new jerky production plant is scheduled to open in the first quarter of 2015 in Chandler, Minnesota, a tiny town of fewer than 300 people in the southwest corner of the state.

Jon Sebastiani, son of Sam Sebastiani and great-grandson of the founder of Sebastiani Vineyards and Winery, sees his dried-meat product line as a vast improvement over most sweet or salty snack foods.

Sales of dried-meat snacks, estimated as a $2.5 billion industry, are growing at 20 percent, Mr. Sebastiani said, in a total snack market estimated at $100 billion. “People are shocked when they hear the size of the jerky space,” he said.

“Right now my focus is on integrating this company with Hershey,” Mr. Sebastiani said, “and being a beacon of innovation in the snack space for them.”

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