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Hershey’s Picks Up One Bar To Enhance Snack Portfolio

As part of its shift from confection to a broader snacking platform, Hershey announced in late August its acquisition of the low-sugar, high-protein ONE Brands portfolio. The purchase price, which was financed with cash on hand as well as short term borrowings, was $397 million, or approximately $325 million net of tax benefits. The transaction is expected to close in the fourth quarter of 2019.

ONE, formerly known as Oh Yeah! Nutrition, was founded in 1999 by Ron McAfee. In January 2017 venture firm CAVU invested in the operation, pivoting the company to focus from OhYeah! Bars to the ONE brand. By October of that year, CAVU rebranded the line from a sports nutrition product to more of a lifestyle brand and brought aboard CPG veteran Peter Burns as CEO. Under Burns, who had just shepherded nut butter brand Justin’s through a sale to Hormel, sales execution accelerated.

In March 2018, the company launched its Basix line, which is naturally sweetened with stevia versus the classic bar’s usage sugar alcohols. That release allowed ONE to expand deeper into the natural channel, an enhancement to the company’s existing business in mass, club and grocery.

Hershey noted in a release that ONE will complement the Oatmega protein bar line, which was part of the company’s acquisition of Amplify Snacks in 2018. ONE bars have been showing strong growth in retail channels covered by data provider IRI, which indicated that the company was the fastest growing in the nutrition bar category for the 52 weeks preceding July 1, 2019. IRI pegged sales at just over $80 million for that period.

Recent months have seen the already competitive bar category tighten even further, with established brands (and their deep pocketbooks) staking out subsegments of the category. In June, Mondelez purchased the majority of refrigerated bar brand Perfect Snacks, as part of its emphasis on fresh snacking. And in mid August The Simply Good Company, maker of the Atkins line of bars, bought low net-carbohydrate focused Quest Nutritionals for the price tag of $1 billion.

Quest Acquired for $1 Billion

The Simply Good Foods Company, a producer of nutritional foods and snacking products, announced on August 22 its intention to acquire protein-centered brand Quest Nutrition for $1 billion in cash, or approximately $870 million net of tax benefits.

Simply Good, which produces bars and shakes under the Atkins and Simply brands, financed the deal with approximately $225 million of cash on its balance sheet, as well as financing from Barclays, Credit Suisse and Goldman Sachs. The billion-dollar price tag represents a purchase price of approximately 14.3x adjusted EBITDA.

In a release, Simply Good stated that the combined Atkins and Quest brands will generate an estimated $800 million in net sales. For the 12 months ending May 25, 2019, Simply Good reported $492 million in sales and $93 million in adjusted EBITDA, while Quest’s 2019 revenues is projected at approximately $345 million, with an adjusted EBITDA of $50 million.

Founded in 2010 by Tom Bilyeu, Quest quickly grew to the No. 2 spot on the 2014 Inc. 5000 list, with reported 2013 revenues of $82.6 million and a three-year growth rate of 57,348%. In 2015, venture capital firm VMG invested in the El Segundo, Calif.-based company, in a deal reportedly valued at around $900 million, based on revenue of roughly $300 million, according to website

Though the company built its initial following through a variety of indulgence-inspired bars, Quest — under the guiding principle of creating low-net-carbohydrate, low-sugar and high-protein products — has since expanded into adjacent categories of functional cookies, shake mixes, chips and frozen pizzas. While both Quest and Atkins are focused on fitness-minded shoppers, the latter has traditionally positioned itself as a weight-loss alternative.

Scalzo told analysts that Quest and Atkins consumers see “almost no overlap” despite both competing in the crowded bar space. Within the category, he added, Atkins is positioned as a “low-carb lifestyle brand,” while Quest is viewed as a “sports and active nutrition brand.”

According to Simply Good, Quest’s bars (which also have the highest margin of all of its products) will account for 68% of the company’s revenue in 2019. Chips, cookies and “other products” — including a line of frozen pizzas — are estimated to account for only 9%, 8% and 10% of Quest’s sales, respectively. The company’s 2018 launches have seen varied adoption, with Quest’s pizza line seeing 100% net sales growth from 2018, its chips 70% net sales growth, and cookies only 11% net sales growth.