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Hershey will join
Some tidbits to chew on
A glance at the two firms:
Hershey Foods Corp.Headquarters: Hershey, Pa.
Workers: More than 13,000
Annual sales: $4 billion
Brands: Hershey's, Reese's, Kit Kat, Jolly Rancher, Twizzlers
Mauna Loa Macadamia Nut Corp.Headquarters: Hilo
Workers: About 300
Annual sales: $80 million
Parent: Shansby Group, based in California
Products: Roasted macadamia nuts, chocolate-covered nuts, macadamia nut oil
The deal, which is projected to close by the end of the year, is expected to boost revenues for Mauna Loa and other Hawaii-based macadamia nut suppliers and producers. However, local companies were concerned about whether Hawaii would have enough nuts to feed a potential increase in demand.
Hershey did not release detailed plans for Mauna Loa and its 300 employees, though Hershey will add Mauna Loa's portfolio of premium macadamia nuts, nut-based confections and cookies to its stable of iconic brands, said Judy Hearth, spokeswoman for Hershey.
"We're proud of Mauna Loa's performance, and our strong sales growth shows the momentum and significant marketplace potential of our brand," said Darrell Askey, president of Mauna Loa. "Now, with the addition of Hershey's expanded channel and marketing expertise, we can take Mauna Loa's portfolio of premium macada-mia nut offerings to new heights."
Last month, Mauna Loa, the state's largest macadamia nut processor, dropped a plan to merge with MacFarms of Hawaii LLC, Hawaii's No. 2 processor and grower. A competing grower and nut processor had sued to block the deal.
With revenues of more than $4 billion and more than 13,000 employees worldwide, Hershey offers a veritable sin city of products such as Hershey's, Reese's, Hershey's Kisses, Kit Kat, Almond Joy, Mounds, York, Jolly Rancher and Twizzlers.
Hershey also offers products developed to address the nutritional interests of today's health-conscious consumers, many of whom believe macadamia nuts help cut cholesterol and promote heart health.
A shortage of macadamia nuts, increased demand due to the Atkins health craze and an ever-growing fascination with Hawaii as a tourist destination made this the perfect time for Hershey to enter the state's macadamia nut industry, said Michael Purdy, chairman and president of Island Princess.
"Five years ago we couldn't give macadamia nuts away; now it's an untapped market," Purdy said. "There is a worldwide shortage of macadamia nuts, and we have the largest demand ever -- Hershey had to see the opportunities."
Purdy said the market is strong enough to support Island Princess, Hershey and other macadamia nut candy makers as long as they differentiate their products.
"Hawaiian nuts are at a premium, and we are riding that roller coaster up," he said. "We offer higher-end products, so I don't think Hershey will be a direct competitor."
A larger concern is what will happen if Hershey begins using more macadamia nuts, said Dennis Simonis, president and chief operating officer of ML Macadamia Orchards LP, a chief supplier for Mauna Loa.
"Hershey's marketing and distribution network will certainly give macadamia nuts more exposure, but will the industry, which produces less than 50 million pounds a year, be able to support it?" Simonis said.
Hawaii is under the gun in terms of being a macadamia nut producer because there are land shortages, and the cost of production is high, Purdy said.
While the acquisition should help further introduce macadamia nuts to consumers and boost sales, it is unlikely to have as large an impact on Hawaii's agriculture, Purdy said.
"Most of the farmers are very happy right now. In general, prices are sky high, and growers are fat and happy and making more money than they've ever seen," he said. "The acquisition won't probably register much of a blip on their radar screen."
Acquiring Mauna Loa, which has annual sales of approximately $80 million and a 40 percent share of the local macadamia market, will allow Hershey to strengthen its presence in the broader snack industry, said Richard Lenny, chairman, president and chief executive officer for Hershey.
Hawaiian Host, which has competed with Mauna Loa in the past, said it is too early to tell how Hershey's entry into the market will affect the company. Sales are strong, and Hawaiian Host is looking forward to a robust holiday season, said Keith Sakamoto, the company's executive vice president of sales and marketing.
"After the 9/11 period, travel tourism has recovered well and we've benefited," Sakamoto said. Hawaiian Host also will continue to benefit from its reputation as a local company, he said.
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