Hershey, Campbell Soup Bulk Up With Big Deals on Snacks -- WSJ
19 December 2017 - 7:02PM
Dow Jones News
Soup and candy makers broaden offerings with multibillion-dollar
deals for pretzels and popcorn
By Annie Gasparro
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 19, 2017).
Campbell Soup Co. and Hershey Co. plan to buy smaller,
higher-growth snack companies in the biggest efforts yet to broaden
their cupboards well beyond soup and candy.
Campbell said it would acquire Snyder's-Lance Inc. for $6.1
billion, including debt, the largest deal in the company's history.
Hershey said it would buy Amplify Snack Brands Inc. in a deal
valued at $1.6 billion, including debt. It's Hershey's largest deal
also.
Campbell and Hershey, iconic American mainstays, are under
growing pressure from consumers looking for healthier options as
well as more portable, convenient alternatives to cooking. The two
food giants have taken steps in recent years through acquisitions
and product launches to reinvent themselves. Peers such as General
Mills Inc. and Kraft Heinz Co. have also felt the impact of
families swapping full meals for snacks and replacing shelf-stable,
packaged food with fresher alternatives.
U.S. snack sales rose to $89 billion last year, growing at a
compound average of 3% annually over the prior three years,
according to market research firm IRI. That makes it a rare bright
spot in an otherwise bleak market for packaged food.
Campbell Chief Executive Denise Morrison said there is "a
fundamental change in consumer behavior...the lines between snacks
and meals are blurring." She said Campbell will now make everything
"from soup to nuts, " with 46% of its sales coming from snacks
after the deal, and just over a quarter from soup. Reaching that
tipping point, she said, would further insulate the company from
the depressed trends in soup and its other meal-oriented brands
like SpaghettiOs.
Campbell initially approached Snyder's-Lance with an offer last
summer. From 2012 to 2016, Snyder's-Lance's sales rose at a
compound average of 11.5% a year, while Campbell, which already
owns snack brands like Goldfish crackers and Pepperidge Farm
cookies, has posted declines in net sales the past three fiscal
years.
During Ms. Morrison's tenure as chief, Campbell has bought other
trendy, health-focused brands like Bolthouse Farms carrots and
refrigerated juices and Plum Organics baby food. Earlier this
month, it completed its acquisition of Pacific Foods, a maker of
organic soup and other meals. But the purchase of Snyder's-Lance's
Hanover pretzels and Kettle chips highlights its intention to focus
on snacking, as well as fresh and organic foods.
Hershey Chief Michele Buck, who stepped into the role in March,
said Monday's announced deal shows the 100-year-old company's
"seriousness and intent" of becoming a broader snacking company.
The addition of SkinnyPop popcorn and other savory snacks to
Hershey's past purchases of Krave jerky and BarkTHINS gives the
company a strong foothold in the snacking sector, she said in an
interview. Hershey said SkinnyPop had double-digit percentage sales
growth in recent years.
Both Campbell and Hershey said these deals will also allow them
to save money by combining some operations.
Industry analysts say a need for growth, coupled with newfound
clarity on corporate taxes, are likely to spur more mergers and
acquisitions by big food companies in the coming year.
In recent months, Kellogg Co. said it would pay $600 million for
RXBar, which makes protein bars using simple ingredients. M&M's
candy maker Mars Inc. made a minority investment in KIND LLC, whose
fruit-and-nut bars have stolen sales from candy at store checkout
lanes. And Conagra Brands Inc. paid $250 million for the maker of
Angie's Boomchickapop flavored popcorn.
Corrections & Amplifications An earlier version of this
article misspelled the name of Campbell Soup in the headline. (Dec.
18, 2017)
Write to Annie Gasparro at annie.gasparro@wsj.com
(END) Dow Jones Newswires
December 19, 2017 02:47 ET (07:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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