Hershey enters premium milk with a2 partnership

Dive Brief:

• Hershey is partnering with a2 Milk to create a milk co-branded by the two CPGs, the companies said in a statement.
• Hershey’s a2 Milk, which is made using 2% reduced fat milk and Hershey’s cocoa, is scheduled to hit retailers’ shelves in January. The beverage is Hershey’s first partnership with a premium milk company.
• The new milk is the latest rollout by the Pennsylvania-based snack and confection maker that expands its reach into better-for-you offerings and new product categories.

Dive Insight:

While the maker of Reese’s, Almond Joy and its namesake chocolate bar remains a major player in the indulgent sweets space, Hershey has moved aggressively under the direction of CEO Michele Buck to broaden its reach of products for consumers who are more closely watching what they eat.

Since Buck took over in 2017, Hershey purchased fast-growing SkinnyPop popcorn, protein-bar maker One Brands and invested an undisclosed amount in Quinn, a natural foods snack manufacturer. Earlier this year, Hershey bought Lily’s, a fast-growing, better-for-you confectionery brand whose low-sugar products include dark and milk chocolate style bars, baking chips, peanut butter cups and gummies. It also is expanding its portfolio to deliver more reduced sugar, organic and plant-based alternatives.

“We are really putting a big bet in growth in the better-for-you area,” Kristen Riggs, Hershey’s chief growth officer, said in February. “If we want to participate in that growth then we need to have more solutions.”

The partnership with a2 brings Hershey into the premium milk space and provides the company with another way to promote its brand name beyond the snacks or confection aisles. Most milk products contain both A1 and A2 proteins, but medical research has found that A1 can cause stomach discomfort. A2 Milk sells dairy products that only contain the A2 protein.

The new Hershey’s a2 Milk benefits not only from this premium attribute but the use of Hershey’s own cocoa. It also hits on other trends by containing 8 grams of protein per serving, and eschewing artificial flavors, colors and preservatives. Even though the product doesn’t hit shelves for a few months, Hershey is already expecting it to be a success.

“Partnering with The a2 Milk Company not only aligns us with a brand that is synonymous with quality and rapid growth but also selling a product that is a staple in almost every family’s refrigerator,” Ernie Savo, senior director of global licensing at Hershey said. “It’s an excellent co-branding opportunity that we expect to yield strong results.”  

Hershey is no stranger to seeing its name adorn other product. In the past, it has partnered with General Mills on cereal, Yuengling in beer, Mrs. Freshley’s on chocolate cupcakes, Dunkin’ on drinks and doughnuts flavored with Kit Kat, Heath and Hershey’s Cookies ‘n’ Creme candies, and Krispy Kreme on s’mores doughnuts. 

For a2, which only entered the U.S. in 2015 and already finds itself carried in more than 23,000 stores, working with the 127-year-old Hershey gives it a storied partner and new product offering to expand its footprint.

Premium milks have been one of the few bright spots in an otherwise challenging time for the dairy product. Coca-Cola acquired the remaining stake in Fairlife from its joint venture partner in early 2020. Fairlife, which launched in 2012, started with its Core Power product, a high-protein milk shake, and has since expanded into a wide portfolio of value-added dairy products including ice cream.