August 22, 2017

Brynwood Partners and Mondelez announced that they have jointly agreed to exit Back to Nature Foods Company through a deal to sell the company to B&G Foods for $162.5 million in cash. The deal, which is awaiting regulatory approval, is expected to close in the third quarter of this year.

Back to Nature, which is an independent producer of better-for-you cookies, crackers, granolas, juices, and nuts, was formed in 2012 through a unique joint venture deal struck between Brynwood Partners VI LP and Mondelez under which Brynwood VI acquired the operating rights to the venture and Mondelez held a minority position. A year later, Mondelez contributed the well-known Snackwells cookie brand to the joint venture.

The unique joint venture with Mondelēz International showcased Brynwood Partners’ investment and operational strengths in consumer corporate carve outs,” said Hendrik Hartong III, chairman and CEO, Brynwood Partners. “We are very pleased with the outcome of this transaction as we achieved a terrific result for both Brynwood VI and Mondelēz International. We were able to restore, invigorate and grow the outstanding Back to Nature and SnackWell’s brands and create a strong standalone company that attracted a prominent strategic buyer in B&G Foods.”

Smart Snacking

In recent years, snacking has demonstrated continued growth as a consumer-led trend. However, this growth has recently intensified, climbing from 76 percent of consumers snacking in 2014, to 83 percent of consumers saying they snack in 2016, according to Technomic.

“With consumers’ lives getting busier, snacks are serving more needs than in the past,” explained Kelly Weikel, director of consumer insights at Technomic. “To gain share, operators and suppliers must adapt their snack lineup to meet consumers’ wide range of need states—from tiding them over to the next meal to replacing meals, to providing nutritious, supplemental treats.”

Drilling down, there is even more potential for return on investment in the better-for-you snack category, as consumers are more often opting for snack foods as health plays a greater role in food choices, and younger consumers blur the lines between snacking and formal meals, reports Food Dive.

Further supporting indications that snacking is a consumption pattern has staying power, is that today, 24 percent of all snack foods are eaten during meal times, according to a report issued earlier this year by The NPD Group, compared to 21 percent five years ago – a trend that is expected to continue, with expectations that the trend will increase by another 12 percent.

The addition of Back to Nature and Snackwells to B&G Foods’ portfolio will give the group two brands that are worth $80 million in sales each year, and will generate greater exposure to the growth expected from this promising food category. However, Food Dive notes that B&G will need to apply its expertise in reinvigorating stagnant brands in order to realize their full potential.

Recent Moves

B&G Foods, owner of more than 40 brands including Pirate’s Booty and Molly McButter, has had a history of buying prominent but struggling brands and returning them to a position of growth, as it did when it bought the Cream of Wheat brand from Kraft Foods Inc. turning sales around and increasing profitability.

In September 2015 B&G agreed to acquire Green Giant and the Le Sueur canned vegetable brands from General Mills for $765 million.

“Although Green Giant has struggled recently, it’s a truly iconic brand,” B&G Chief Executive Bob Cantwell said in an interview at the time. “There is a lot of opportunity to move the needle up on this brand by being more innovative and reinvigorating the brand, as we’ve done with dozens of other acquired brands over the years.”

One year later, B&G continued to diversify with the acquisition of ACH Food Companies Inc., a spice and seasoning business, for $365 million in cash. The deal broadened B&G’s reach,  giving the group exposure to the growing spice and seasonings segment which capitalizes on consumer demands for healthy, flavorful foods without artificial ingredients, fats, or sugars.

This deal for ACH Food was quickly followed by B&G’s acquisition of Victoria Fine Foods in December 2016 from Huron Capital Partners for $70 million in cash. Victoria Fine Foods added premium pastas, sauces, savory condiments, and gourmet spreads to B&G’s lineup.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.