Portfolio optimization: Need of the hour
Packaged food manufacturers in the United States have long been grappling with sluggish sales. Moderating demand for their traditional products amid anti-sugar drives and the consumer shift toward good-for-you, healthy foods are taking a toll on these manufacturers’ growth prospects. Inflation in commodity prices, increased transportation and logistics costs, and business reinvestment needs to support innovation also continue to hurt their margins.
Given the challenging operating environment, food manufacturers are looking to expand in the fast-growing categories with bolt-on acquisitions in the food segment, including wholesome on-the-go snacks. Of course, industry consolidation leads to premium prices, which is a matter of concern for companies such as General Mills (GIS).
Other notable food makers such as Hershey (HSY), McCormick (MKC), Kellogg (K), Campbell Soup (CPB), and Conagra Brands (CAG) have also made strategic acquisitions in the past year. They are focused on driving sales and reshaping their product portfolios to better align themselves with changing consumer needs.
Recent notable deals
Hershey paid $1.6 billion to acquire Amplify Snack Brands. Through the acquisition, Hershey got Amplify’s fast-growing snack brands SkinnyPop popcorn, Tyrrells, and Paqui.
Spices and seasonings leader McCormick (MKC) acquired RB Foods from the Reckitt Benckiser Group for $4.2 billion. Kellogg (K) acquired the protein-rich RXBAR brand for about $600 million. Conagra Brands (CAG) bought Angie’s Artisan Treats for an undisclosed amount to revamp its portfolio of brands.