Dive Brief:
- The Campbell’s Company is buying a 49% stake in La Regina, the maker of Rao’s pasta sauce, with the option to buy the rest of the Italian food manufacturer.
- Campbell’s said the transaction, which will be paid in two tranches, will better position the CPG giant to continue growing the brand by ensuring quality, accelerating innovation and product development. The company expects the deal to close in the second half of its 2026 fiscal year.
- Campbell’s purchased Rao’s in 2024 as part of its $2.7 billion acquisition of Sovos Brands.
Dive Insight:
Rao’s is a key part of Campbell’s efforts to accelerate growth and increase its exposure to premium products. By acquiring more of a stake in the Rao’s manufacturer, the food giant can ensure the popular sauce brand’s quality remains the same while setting it up for further growth.
As food makers look to ensure they have capacity and flexibility over a fast-growing brand, several have turned to M&A.
When Hershey purchased Dot’s four years ago, it also acquired three manufacturing locations used to make the pretzel. Chip maker Utz Brands purchased the largest manufacturer of tortilla chips for its On The Border brand.
It’s a similar strategy that Campbell’s is taking with Rao’s, which traces its roots to a legendary New York City restaurant dating back to the 1890s. The agreement with La Regina gives Campbell’s the option to purchase the remaining 51% stake, or the sauce maker can require the soup giant to complete the transaction.
“Our expanded partnership with La Regina strengthens our ability to deliver on the Rao’s growth opportunity,” Campbell’s CEO Mick Beekhuizen said in a statement.
Rao’s has branched out into pasta, frozen entrees, pizza and soups. But Beekhuizen told Food Dive last year that it’s important for Campbell’s to “stay focused” on the sauce, which makes up the overwhelming majority of Rao’s sales.
Beekhuizen told analysts Tuesday that the company continues “to be encouraged by the growth potential of this great brand driven by sustained household penetration gains and high repeat rates.”
During the first quarter, Rao’s posted dollar and volume share growth, and it remained the top brand in the sauce category, the CEO said. Rao’s recorded low single-digit dollar consumption growth, which outpaced rivals in the sauce category.
Rao’s was a bright spot for Campbell’s in the most recent quarter.
Campbell’s net sales during the quarter, which ended Nov. 2, fell 3% from a year ago to $2.7 billion, with some of the decline coming from divestitures such as Noosa yogurt.
Campbell’s and its food peers have struggled in recent months with falling sales and declining margins as they grapple with higher input costs for materials, such as cans, due to tariffs and a pullback in consumer spending.
