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Diamond Foods to Improve Snyder’s-Lance Presence in Healthier Snacks

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Snyder’s-Lance focus on healthier snacks

Snyder’s-Lance (LNCE) is promoting “better-for-you” snacking options in hopes of greater revenue. This also appears to be part of the reason for its acquisition of Diamond Foods.

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Rising demand for healthier snacks

Several key points here are:

  • Consumer demand for natural and organic products has been growing
  • According to the Nutrition Business Journal, in the last five years, natural and organic food and beverage sales in the United States grew at a CAGR (compound annual growth rate) of 15%, reaching $80 billion in 2015
  • According to IRI, a Chicago market research firm, snacking frequency in the United States rose in the last five years from 1.9 snacks a day to 2.8 snacks a day. In 2014, 51% of US consumers consumed more than three snacks a day

Snyder’s-Lance’s acquisitions in the snacks market

The company has completed three acquisitions in the healthy snack category in fiscal 2014, including:

  • Baptista’s Bakery, involved in the development and manufacturing of snack foods including organic, non-GMO (genetically modified organisms), all-natural, and gluten-free products
  • Late July, a maker of organic and non-GMO baked and salty snacks

The funds generated from the divestiture of private brands were more than sufficient to fund these acquisitions. Diamond Foods’ (DMND) acquisition could further strengthen Snyder’s-Lance’s offerings with Diamond Foods’ diversified portfolio of non-GMO and organic branded products. Diamond Foods sells its products under five brands, including Kettle Chips and Emerald.

Peer Group Comparison

Like Snyder’s-Lance, many food companies (XLP) (IYK) entered in the healthy snacks market:

  • Hershey (HSY) recently acquired Krave, a manufacturer of beef jerky snacks
  • In 2013, milk producer, The WhiteWave Foods Company (WWAV) acquired Earthbound Farms, an organic produce company in North America
  • In 2014, General Mills (GIS) acquired Annie’s, a natural and organic food company, to expand its presence in the US branded organic and natural foods industry
  • In early 2015, Mondelez International (MDLZ) bought Enjoy Life Foods, a small allergen-free snack food company, to tap consumer demand in the healthier and natural foods market
  • In an attempt to extend its presence in rapidly growing packaged fresh market, Campbell Soup (CPB) entered into an agreement in June 2015 to acquire Garden Fresh Gourmet, a leader in refrigerated salsa in the United States
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