Dive Brief:
- Reckitt Benckiser is considering selling its food business, which includes French’s mustard and ketchup, according to Bloomberg.
- In 2016, French’s Foods accounted for 4% of Reckitt Benckiser’s total revenue, representing around $515 million. The company has owned French’s since the 1920s.
- Reckitt Benckiser said its like-for-like food sales increased 5% last year. The division makes ketchup, yellow mustard, Frank’s Red Hot sauces, onion flavorings and other products.
Dive Insight:
Industry insiders believe Reckitt Benckiser is looking to sell its food business to help pay for its $16.6 billion acquisition of its infant-formula maker Mead Johnson. This could mean the popular French’s brand will be jettisoned as the company focuses on its core businesses.
Some outlets have suggested Kraft Heinz as a possible home, but antitrust issues are likely get in the way. Still, the company has been rumored to be involved in some big acquisition targets recently, including the failed $143 billion attempt at taking over Unilever. Another option may be Unilever itself. It could consider buying the segment and adding it to its Hellmann's mayo line—especially with rumors the company is splitting off its food segment.
Many CPG brands seem to be selling off slower-growing food categories in favor of pursuing healthier or more household brands. Reckitt CEO Rakesh Kapoor noted the company is focusing on businesses such as Dettol cleaner and Durex condoms, plus the Enfamil baby formula brand it’s getting from the Mead Johnson deal.
With food a sliver of Reckitt Benckiser's business, it's not surprising to see French's looking for a new home. The business, small in the food space, will be a nice cheap complement to other companies looking to enlarge their condiment operations.