As the industry prepares for a consumer comeback, food and beverage companies continue to reshape portfolios, with a focus on health and wellness, snacks and core growth.
As part of industry-wide efforts to expand nutritional offerings, food and beverage companies continue buying better-for-you brands. During the quarter, J.M. Smucker Co. acquired Enray, Inc., a maker of organic, gluten-free ancient grain products; Boulder Brands, Inc. bought an 80% stake in GlucoBrands, L.L.C., owner of Level Life Foods diabetes management products; and Post Holdings, Inc. agreed to acquire Premier Nutrition Corp., a maker of protein bars and shakes. Additionally, Starbucks and Danone in July entered into an agreement to develop Greek yogurt products to be sold in Starbucks stores and the grocery channel.
Snacks have been a hot seller over recent quarters, as companies increasingly pack their portfolios with chips, nutrition bars and cookie brands. Third-quarter transactions include the completion of Campbell Soup Co.’s purchase of Danish snack maker the Kelsen Group, Hillshire Brands Co.’s acquisition of Golden Island Jerky gourmet jerky brand, and Investcorp’s acquisition of Tyrrells Potato Crisps.
Many transactions during the quarter represented increased investment in essential platforms, such as yogurt giant Danone’s purchase of the YoCrunch yogurt brand in August. Similar deals include Barry Callebaut’s July purchase of Petra Foods Ltd.’s cocoa division, Snyder’s-Lance, Inc.’s August acquisition of snack food distributor Stateline Service Corp., and Dairy Farmers of America’s September deal for Dairy Maid, a milk, juice and fruit drink processor.
“There’s a lot of movement to focus on the core brands and maybe drop some nonperforming brands,” said Matthew O’ Loughlin, partner at Manatt, Phelps & Phillips, L.L.P., who counsels public and private companies, investors and private equity groups in the food and beverage industry. “All businesses need to balance such actions against mitigating increasing costs and achieving revenue growth over the short and long terms.” Unilever, which has been steadily shedding food brands from its portfolio over the past couple years, sold its Wish-Bone salad dressings business in August to Pinnacle Foods. Also during the quarter, ConAgra Foods sold its Lightlife Foods meatless products business to Brynwood Partners VI L.P., a private equity firm, and Campbell divested its European simple meals business to private equity firm CVC Capital Partners.
When David Murdock, chairman and chief executive officer of Dole Foods Company, Inc., offered to buy all outstanding shares of his company’s common stock in August, the deal represented an industry outlier. “I don’t think that’s a harbinger of the industry — all the public companies going private — but more reflective of the general considerations facing all public companies of whether to stay public or go private,” Mr. O’Loughlin said.