Speaking to FoodNavigator-USA after Campbell Soup announced the deal, Greg Wank, leader of the food and beverage industry practice at accounting and advisory firm Anchin, said it was hard to say if the price tag was justified without a deep dive into the P&L.
But he added: “I think the bigger picture here is the continued trend towards organic and plant-based foods. This gives Campbell’s more clean labeled products to go with Plum Organics and Garden Fresh.”
An all cash deal “also speaks to the relative low cost of borrowing by these large CPG companies like Campbell’s,” he added.
'Pacific Foods is one of the most iconic center of the store focused natural/organic brands'
Wayne Wu, managing director at VMG Partners, which provides financial resources and strategic guidance to fast-growing CPG brands, told us there is "clear strategic value for Campbell’s" in this deal, while "the valuation certainly reflects the future upside of the complementary nature of the combination.”
He added: "Pacific Foods is definitely one of the most iconic center of the store focused natural / organic brands. We’ve been long time fans and admirers of the brand at VMG. Given Campbell’s center of the store heritage and soup legacy, Pacific Foods is a tremendous strategic fit to help drive center of the store innovation for Campbell’s.
"As it relates to Pacific Foods, it provides them the opportunity to harness the power of the Campbell’s distribution network to bring their great natural / organic products to the masses."
“This is a strong move. Campbell´s just acquired one of the best, most admired authentic brands in the industry. No one can create what Pacific Foods has created. It had to be acquired. And for that the price is justified. Growth matters and legacy brands are in long-term, unstoppable decline. Pacific Foods represents the future.”
Mike Burgmaier, managing director, Whipstitch Capital
Reinventing the center of the store
Founded in 1987, Pacific Foods generated net sales of $218m in the year to May 31, 2017, and will “further Campbell's efforts to drive innovation in health and well-being to reinvent the center store, while giving the company more access to natural and organic customers and channels,” said the company.
“Pacific Foods is a natural foods industry pioneer that has strong health and well-being and organic credentials, particularly with younger consumers.”
While Pacific Foods has national distribution, teaming up with Campbell will help it expand into more conventional accounts, while becoming part of a larger business will also enable the brand to boost its marketing, brand-building, R&D and customer service capabilities, said Campbell Soup.
Pacific founder: Joining Campbell's allows us to reach more people while increasing our impact on sustainable agriculture
Under the deal, Pacific Foods will become part of Campbell's Americas Simple Meals and Beverages division (Campbell's, V8, Swanson, Prego, Pace and Plum Organics), but will continue to be run from its HQ in Tualatin, Oregon. Founder and CEO Chuck Eggert will also stay on as a supplier of key ingredients through his family farms.
But why sell now? Eggert explained: “A future with Campbell means we can maintain what we value while accelerating growth of the brand in a way that we couldn't do alone, reaching more people while increasing our impact on sustainable agriculture."
Speaking at the Expo West trade show in March, Campbell Soup CEO Denise Morrison said the company was consulting chefs, designers, anthropologists, and futurists to help it think 5-10 years out instead of focusing on the next quarter: "We don't want to be just another big food company. We want to be the biggest small food company, committed to making a profit and making a difference."
Portfolio re-engineering
The deal is Campbell's fifth in five years, following the acquisition of Bolthouse Farms in 2012, Plum Organics and Kelsen in 2013, and Garden Fresh Gourmet in 2015 as the firm still best known for its iconic condensed soup seeks to boost its presence in more in-trend segments of the market.
It has also made some high-profile recent investments in personalized nutrition business Habit and meal-kit service Chef'd.
Speaking at the Expo West show in March, Denise Morrison said Campbell Soup was focusing on four innovation platforms: Better.Me (personalized nutrition), My.Moments (more purposeful, healthier snacks), Future commerce (e-commerce opportunities), and Limitless local (embracing transparency, smaller, more regional farming that "fosters a new narrative around quality, community and place").
It is also actively exploring acquisition opportunities in snacking, which has to be become more "mindful" as the lines between meals and snacks continue to blur, she added: "We want to create entirely new snacking platforms."
Pepper Hamilton LLP and Jones Day acted as Campbell's legal counsels. Pacific Foods was advised by The Rondout Group and Tonkon Torp LLP acted as legal counsel.
FOOD VISION USA 2017
Hear more from Campbell Soup at FOOD VISION USA 2017, where R&D VP Americas Jeff George will join a glittering line up of speakers from Sir Kensington's (Unilever), Miyoko's Kitchen, PeaPod, Chef'd, Terra's Kitchen, The Good Food Institute, VMG Partners, Maple Hill Creamery, Campbell Soup, Good Karma Foods, Geltor, CircleUp, Mattson, Hartman Group, Ketchum, Food Future Co, Suncrest USA, Sun Basket, and Farmer's Fridge.
Themes we'll address at this year's event include:
- Where is the plant-based food movement heading?
- What does 'clean label' really mean?
- What's the connection between the gut microbiome and human health?
- Who is winning in the direct to consumer meal kit/meal delivery space and why?
- How will Amazon's deal with Whole Foods change the food e-commerce landscape?
- Big food? Small food? Or smarter food?
- From grass-fed to hydroponics: Food and farming… where next?
- Can we make gelatin without animals?
- Will consumers embrace 'clean' (a.k.a. cultured) meat?
Check out the full list of speakers and Register HERE
Calling all food and beverage entrepreneurs:
Do you want a FREE place at FOOD VISION USA?