Dive Brief:
- McCormick & Company is set to acquire 100% of the shares of One World Foods, Inc., which sells Stubb's barbeque sauces, for about $100 million in cash. The acquisition is estimated to be completed by the end of July 2015 pending regulatory approval.
- Stubb's sits at the top of the premium barbecue sauce category with a projected annual income of $30 million in 2015. This comes after 2013 and 2014's annual sales growth, which surpassed 20% both years.
- Stubb's offers a product line of marinades, rubs, and skillet sauces that will be complementary to McCormick's line of grilling products from its own Grill Mates, Lawry's, and McCormick brands.
Dive Insight:
McCormick has been very focused on acquisitions lately, and Stubb's is its third acquisition announced in 2015 alone. One similar acquisition of Brand Aromatics, a New Jersey-based "supplier of natural savory flavors, marinades, and broth and stock concentrates to the packaged food industry," according to a press release, was completed in March. In February, McCormick moved to acquire private Italian spices company Drogheria & Alimentari, giving McCormick a more established presence in European markets, which it has since completed.
It reported a 3% sales uptick for fiscal year 2014 and, in the same January report, estimated 4% to 6% sales growth for fiscal year 2015. Also, in April, the same day the company launched 21 new products, which included flavored sea salts, chili peppers, and burger sauce mix-ins, McCormick saw its shares hit a 52-week high.
Stubb's acquisition fits in nicely with McCormick's recent attempts to move into the sauce market, as the deal follows the company's debut announcement of its line of skillet sauces back in October. At that point, the company officially entered an already crowded market of products from the likes of Campbell Soup, General Mills, and Frontera. With this latest acquisition, McCormick seems confident in its company's moves to try to attain more of the sauces market share in addition to the dry seasonings it is already famous for.
"McCormick plans to drive sales of the Stubb's brand through expanded distribution, increased household penetration and innovative flavors," according to a press release.