Hershey tests plant-based chocolate bar

Dive Brief:

• Hershey istrialing a plant-based chocolate barin some markets. The new bar, called Hershey's Oat Made, comes in two varieties: Extra Creamy Almond and Sea Salt, and Classic Dark Chocolate. They will be available in limited distribution at select U.S. national retailers through June 2022.
• The new chocolates were developed using oats as an ingredient to improve upon plant-based chocolate options already on the market, DanMohnshine, team lead of strategic growth platforms at Hershey, wrote in a blog post on the company's website.
• Hershey has been moving aggressively into the better-for-you confectionery space. The company has been focusing oncreating organic, low-sugar, sugar-free and bite-sized versionsof its classic confections, including its iconic candy bars and Reese's Peanut Butter Cups. The company alsorecently acquired Lily's, a fast-growing premium low-sugar chocolate brand.

Dive Insight:

With a big push into better-for-you confections, it was only a matter of time before Hershey approached the plant-based chocolate space. And with the pilot test of Hershey's Oat Made, it's getting closer to having a dairy-free sweet on the market. Michele Buck, Hershey's CEO, first mentioned the company was working on plant-based chocolate in aFebruary earnings call.

The dairy-free chocolate segment as a whole has been heating up this year. According to Abillion, a plant-based online community, plant-based chocolaterepresents 40% of the world's vegan confectionerymarket and is currently worth $1 billion. There's also a lot of room to grow. Food AI company Spoonshot said only5.6% of all chocolate productsin the U.S., U.K. and Australia carry vegan label claims.

Many big confectioners are getting into the plant-based chocolate space. Nestlé, which makes KitKats in most countries except the United States,launched the plant-based KitKat Vthis summer. (Hershey hasthe rights to manufacture Kit Katin the U.S.) Mars was the first big manufacturer in the space with thevegan version of its Galaxy bar, launching in the U.K. in late 2019.

But while Hershey is a later arrival to the plant-based chocolate party, it has a few things these other brands do not. First and foremost, neither of these big brands' plant-based chocolates are in the United States, so Hershey is the only big confectioner in this market so far. With a later product launch, Hershey also has had the opportunity to observe how the public responded to Mars and Nestlé's offerings — which have receiveddecidedlymixedreviews.

Hershey's Oat Made uses oats, while Galaxy uses hazelnut and Nestle's KitKat uses rice milk. Oat milk has a reputation for being creamier and more like dairy milk, havingbuilt much of its U.S. popularitythrough use in coffee shops. Oat milk also is non-allergenic, so these bars also may offer options for many consumers with food allergies.

But more than the ingredients, Hershey is keeping a careful eye on whether the new launch delivers on the metrics that matter before making it widely available. Mohnshine's blog post mentions the careful distribution of the bars, which enable Hershey to evaluate whether it's breaking into the better-for-you confectionery market and delivering new market share.

Hershey has not said where and how it is distributing the bars, though operators of a North Carolina food truckfound several on the shelfat a big box store and made them part of orders over the weekend.Mohnshinewrote the Oat Made product test will help inform Hershey move toward a successful formulation, distribution strategy, and even whether the product should continue to be called Oat Made or perhaps something like plant based.

This product test shows how plant-based food continues to attract consumers from across the spectrum. And while many consumers of plant-based milk, eggs and meat are not vegans or vegetarians, the same likely holds true for plant-based chocolate. As Hershey works to improve its health profile and give shoppers more choice, consumers who choose plant-based options for health reasons may also prefer plant-based chocolate.