LOS ANGELES, CA - FEBRUARY 13: Appetizers made with KRAVE Jerky are displayed at the post-race ... [+]
Sonoma Brands has acquired Krave back from Hershey for an undisclosed sum after selling the culinary meat snacks brand to the U.S. chocolate maker for $218.7 million in 2015.
The deal came shortly after Hershey’s CEO Michele Buck announced in a recent earnings call that the Reese’s owner was working to divest Krave, alongside two artisan chocolate brands Scharffen Berger and Dagoba, to better prioritize resources against assets that fit its business model.
She said these brands will continue to resonate with consumers, but they require a different go-to-market strategy.
Krave was created by serial CPG entrepreneur Jonathan Sebastiani, who told me the Sonoma team ran the deal themselves instead of hiring external advisors.
Key takeaways from the buyback
Sebastiani wrote me via email that he never regret selling Krave to Hershey, but would put a greater emphasis on the “infrastructure and expertise in that specific category,” should other Sonoma’s portfolio brands become potential acquisition targets by a strategic partner in the future.
“Krave was my first brand and first entrepreneurial endeavor outside of the wine business, and my experience with Krave and Hershey propelled my mission and vision for Sonoma Bands,” Sebastiani said.
Sonoma has so far incubated and invested in a number of high-growth consumer companies, including Smashmallow, Peckish, Dang Foods, Hu Chocolate, and Beepkeeper’s Naturals, whose immunity-boosting products are experiencing a sales spike due to COVID-19.
“I was very excited about a legendary brand like Hershey welcoming Krave into its family… while things didn’t work out as expected, I have no regrets,” Sebastiani said. “In the past few years, I’ve been extremely fortunate to build a strong team here in Sonoma, and continue to build and support emerging brands and lead the region into further prominence as a hub for the food and beverage industry.
“I am very grateful that when the Hershey Company decided to divest Krave, I was their first call… We are thrilled to have Krave return home to Sonoma to continue the brand’s growth trajectory.”
However, Sebastiani blames the management shift and a different supply chain for Krave’s recent struggles.
“Krave was also Hershey’s first endeavor in the meat snacks space, and that naturally comes with some learnings as the brand requires a much different go-to-market strategy and has very different supply chain needs compared with other brands in Hershey’s portfolio,” he explained.
Jonathan Sebastiani is a serial CPG entrepreneur, who created Krave and later Sonoma Brands.
“The brand changed management over the past five years as Krave moved from High Point Artisan Brands in Sonoma to Amplify Snack Brands (SkinnyPop’s owner that Hershey acquired for $1.6 billion in 2017) in Austin, and thus changed teams and lost focus as a result.”
Future plans for Krave and Sonoma Brands
Sebastiani expects Krave to thrive under Sonoma to eventually become the undisrupted leader in the increasingly consolidated premium meat snacking category, as it grows three times faster in the U.S. than regular jerky.
In January, Krave also launched a plant-based jerky made with peas and fava beans to capitalize on the growing meat alternatives sector, which is estimated to reach $3.5 billion in revenues by 2026, according to Markets And Markets’ data.
“Krave has kept its strong foothold in the market,” Sebastiani told me. “In the next year… we will be looking towards new innovation and continued growth across all consumer sectors, [since] different snacking occasions elicit different types of consumer needs.”
He believes the growth of meat snacks won’t slow down due to the rising popularity of plant-based options.
“There is still room for growth in the meat snacking space that we are excited to explore with upcoming innovation,” Sebastiani added. “Neither effort cannibalizes another, but rather opens up greater opportunity for entrepreneurs within this space.”
The growth of Sonoma Brands overall has remained robust amid the continued global pandemic, especially those with an effective online presence.
“Within our portfolio, we have seen brands with strong digital strategies are performing favorably compared to forecast and last year,” Sebastiani said. “Looking ahead, we will certainly be deploying new digital strategy to the Krave direct-to-consumer business.”
