May 2, 2017

New Jersey-based Unilever announced that it has agreed to acquire Sir Kensington’s, a New York-based, mission driven, maker of non-GMO, natural and sustainable condiments for a reported $140 million.

This is the first acquisition for Unilever since the group rejected a takeover bid of $143 billion made by Kraft Heinz in February of this year, stating that the offer “fundamentally undervalued” the company.

Founded in 2010, Sir Kensington’s makes a line of mustard, ketchup, and a vegan mayonnaise called Fabanaise, which is made from aquafaba – the viscous liquid in which legumes such as chickpeas have been cooked.

Shifting consumer demands and intensifying competition from agile startups have large established consumer groups such as Unilever at a disadvantage. Taken together with Unilever’s announcement last month of its intention to divest its spreads business and restructure two key divisions, many suspected that Unilever may exit the food space entirely.

However, the group appears to be streamlining its investments in the food sector to focus on tea, ice cream, and condiments, while also structuring its portfolio to reflect consumer tastes and the company’s goals of sustainability and environmental stewardship.

“We are excited to bring Sir Kensington’s into the Unilever family,” said Kees Kruythoff, president, Unilever, North America. “Their mission to bring ‘integrity and charm to ordinary and overlooked food’ is very much in line with our Unilever Sustainable Living Plan. Sir Kensington’s is an innovative business with outstanding products and a leader in the organic and natural marketplace. We look forward to leveraging our joint understanding of food trends and consumer preferences to significantly grow the business.”

A Matter of Trust

Although Unilever already counts the iconic Hellmann’s Mayonnaise as a key player in its portfolio, the addition of Sir Kensington’s is being seen as filling a void in Unilever’s lineup.

“You may wonder, what is the company that makes Hellmann’s doing acquiring Sir Kensington’s, and why should we trust them?” asked Sir Kensington’s founders Mark Ramadan and Scott Norton, in an online post. “The truth is, food is changing in this country and it’s changing for the better. As a company, Unilever is looking for Sir Kensington’s to help them define the future of good food.”

For Sir Kensington’s, the deal gives the startup powerful backing in the face of mounting competition from other startups in a rapidly crowding space – giving them the ability to negotiate better terms from suppliers and expand its distribution network, reports the New York Times.

“Smaller food companies have a challenge when it comes to customer access, plain and simple,” said Scott Norton, who founded Sir Kensington’s seven years ago with a college friend, Mark Ramadan. “It’s hard really getting the ear of the grocery store buyers and category managers who are the gatekeepers to the American people and their stomachs.”

However, as consumers focus their buying dollars on fresh products found in the perimeters of supermarkets, grocers are increasingly concerned over stagnation in their center aisles, and are looking to startups like Sir Kensington’s to disrupt categories such as condiments, which have been quiet for years.

And although eggless mayonnaise accounts for only a fraction of the overall mayonnaise category, sales have jumped by 20 percent over the last year to a value of $20.6 million according to Nielsen, reports Bloomberg. It is trends such as this that Unilever is betting on to help reach its target of $3 billion in sales over the next 10 years.

“So, what comes next is both a new beginning and a seamless continuation of the daily learning that began seven years ago,” said Norton. “From here, we will work together with Unilever’s world class team to better serve our customers and reach a wider audience with our work — all with the shared principles that have made this partnership possible.”

-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.