Mondelēz has announced plans to acquire a majority interest in Perfect Snacks, a fast-growing refrigerated nutrition bars company that generated around $70m in net revenue in 2018.
Perfect Snacks, known for its organic, non-GMO and nut butter-based ingredients, were launched by Bill Keith along with six of his 13 siblings in 2005 after their father was diagnosed with cancer. They hoped to use the brand to support their family.
Its product range has since expanded from the original Perfect Bar to Perfect Kids refrigerated snack bars and Perfect Bites refrigerated protein snacks.
“We are so excited to be joining the Mondelēz International family,” Keith said in a statement. “We believe Mondelēz International’s purpose, to ‘empower people to snack right,’ aligns very well with why we started this brand and this business.”
The deal, which is expected to close later this summer following regulatory review, came after the U.S. snacks giant acquired Tate’s Bake Shop from global private equity firm The Riverside Company for roughly $500m in 2018.
Mondelēz’s innovation and venture hub SnackFutures, launched in late last year, also made a minority investment in Hu Kitchen’s parent company Hu Master Holdings in April.
The company noted it plans to operate Perfect Snacks as a separate business to maintain its entrepreneurial spirit and the authenticity of the brand, while providing resources to help accelerate growth.
Perfect Snacks’ current leadership, including Bill, Leigh and Charisse Keith, will continue to run their San Diego-headquartered business, and they will retain a “significant minority equity interest” in the company, according to Mondelēz.
North America EVP for Mondelēz, Glen Walter, said: “We have a mission to lead the future of snacking by offering the right product, for the right moment, made the right way.
“Perfect Snacks is an amazing brand, growing fast and a great complement to our existing portfolio that expands our leadership across broader snacking.”
Perfect Snacks has expanded from its original Perfect Bar to Perfect Kids refrigerated snack bars and Perfect Bites refrigerated protein snacks over the years.
He added: “Well-being snacks in general, and refrigerated well-being snacks in particular, are a fast-growing segment and we look forward to working with and supporting the Keith family to help accelerate this brand’s great momentum.”
According to Mintel data, the U.S. refrigerated snacks segment generates around $20bn in annual sales, representing one-third of the total snacking market.
Within that space, well-being snacks, including nutrition bars, packs wit nuts and fruit, yogurt as well as hummus, represent around $7bn and is growing faster than other refrigerated snacks at around 8% a year over the past three years.
Other snack manufacturers are also trying to capitalize on the market momentum by launching similar products.
Daniel Lubetzky-led KIND Snacks, which M&M’s maker Mars previously acquired a minority stake in 2017, released its first frozen bar – available in dark chocolate almond sea salt flavor – in May 2019.
“KIND Frozen upholds our brand’s promise and is consistent with how we’ve always entered new categories – with an eye to creatively elevate people’s overall experience. We’re thrilled that KIND Frozen is disrupting the category by leading with almonds.”
Consumer research firm Euromonitor notes that players that focused solely on snack bars, such as KIND, continue to take share from some of the leading CPG companies, such as Kellogg and General Mills.
“With this success … these companies have tried to tackle other categories with innovations outside of their traditional product lines,” it said. “They have also added new flavors to their already popular product lines.”
Close-up of sign on facade of headquarters of nutrition bar maker Clif Bar in downtown Emeryville, California, June 12, 2018. (Photo by Smith Collection/Gado/Getty Images)
Clif Bar, for example, launched Clif Fruit Smoothie Filled Energy Bar and Clif Energy Granola in 2018, while KIND more than doubled its value share in snack bars over the review period with its launch of KIND Kids – a line of chewy granola bars targeted towards children.
Euromonitor said the increasing consumer preference for clean-label snack bars over diet-centric brands has pushed large CPG companies to look for growth in emerging brands. Kellogg acquired Chicago-based RXBar, created by Peter Rahal, for $600m in 2017.
“This acquisition continued an ongoing trend for big food and beverage companies to buy out smaller players to capture their rapid growth in premium segments,” it noted in a report.
“RXBar is viewed as a way for Kellogg to access the demand for natural products, and by expanding RXBar’s portfolio and learning from the brand’s success, Kellogg hopes to help transform other struggling brands in its portfolio.”
However, market researchers have warned that nutrition bar start-ups will face a difficult time getting their products on shelf and ultimately acquired as the category is becoming increasingly crowded.
A recent report tracking the U.S. food and beverage investment in 2018 showed that the average nutrition bar company received only $1.9m in funding – significantly less than the $7.3m average across the overall food industry.
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I previously worked at William Reed Business Media for three years, covering consumer trends, regulations, M&A and sustainability in the confectionery and snacks se
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