- Global nutrition group Glanbia will purchase SlimFast from private equity firm Kainos Capital for 300 million euros ($350 million), according to a release. The deal also includes nutritional supplement brands Healthy Delights and Nu-Therapy. The transaction is expected to be completed by the end of the year.
- Headquartered in Palm Beach Gardens, Florida, SlimFast has been selling diet shakes, bars, snacks, packaged meals and other supplement foods since 1977. SlimFast is sold in North America, the U.K. and Ireland. Glanbia will operate SlimFast out of its Performance Nutrition segment.
- Glanbia's Group Managing Director Siobhán Talbot told RTÉ that the acquisition helps grow their portfolio to meet new consumer needs. "It plays to global consumer trends focused on convenient formats and snacking. The transaction is in line with our strategic ambition to extend the reach of our Glanbia Performance Nutrition portfolio to related consumer needs," Talbot said.
Much like the product's name, companies looking to narrow their portfolios keep shedding SlimFast, which has been sold three times since 2000. But given struggles to keep the brand relevant in a market with changing consumer needs, this latest sale isn’t a huge surprise.
The amount paid for the weight loss brand keeps dropping, too. Glanbia purchased SlimFast for only 15% of the $2.4 billion Unilever paid for it in 2000 — an indicator of both the flagging market for weight loss products and SlimFast's slowing sales. Unilever also likely lost money on the brand when it sold to Kainos in 2014. Although the financial terms weren’t disclosed, speculations before the deal estimated the company would sell for about $1.7 billion.
Soon after taking over four years ago, SlimFast CEO Christopher Tisi told the Palm Beach Post he had "big plans" for the diet brand to take back the industry-leading position it had before being acquired by Unilever.
As the brand was being sold this week, Kainos Managing Partner Andrew S. Rosen, managing partner of Kainos, said the private equity firm worked hard in the last four years to revitalize "what was an orphan brand within a large multinational company."
Before Kainos sold the brand, the company was making a final push to amp up sales. SlimFast announced changes to help it come in line with today's consumers earlier this year, adding cookies and chocolate bars to its menu and hiring a registered dietitian as a consultant.
Today's consumers are moving more toward fresh and better-for-you products. People trying to lose weight are not necessarily seeking out specialty products, and are becoming more concerned about sugar and restricting carbohydrates. As a result, weight-loss brands have changed hands at bargain-basement prices. In 2013, Nestlé sold weight loss lifestyle brand Jenny Craig, purportedly for less than half of the $600 million it paid seven years earlier. Last year, once-trendy low-fat snacking brand SnackWells sold to B&G Foods in a package deal with cereal and granola brand Back to Nature for $162.5 million — a far cry from the $490 million in sales that SnackWells alone brought Mondelez's Nabisco at the height of its popularity in 1995.
Even though Kainos Capital has recently been working to revitalize SlimFast, this is not an unexpected sale. Bloomberg reported in March that the private equity firm hired Harris Williams to sell the company. At that time, SlimFast was valued at about $400 million.
It makes sense for a large nutrition company like Glanbia to purchase SlimFast. It already has experience with these types of products — the Irish company bought weight loss snack brand ThinkThin in 2015. However, Glanbia's experience in weight loss products and international marketing isn't a foolproof path to success, considering Kainos' expertise in the sector couldn't save the flagging brand.
Jason Molins, an analyst with Goodbody Stockbrokers in Ireland, told Food Dive in an email that recent sales growth at SlimFast — best known for its meal replacement shakes — appears to be growing faster than the weight management market in general.
"The deal helps boost Glanbia’s focus on the fast growing RTD channel, where Glanbia has been notably underrepresented," Molins said.
Davy analysts Cathal Kenny and Roland French told the Irish Times they were optimistic about the deal — Glanbia's largest since it acquiring whey protein brand Optimum Nutrition in 2008.
"It is the first time that Glanbia has acquired a storied brand with mass awareness," the Davy analysts said.
SlimFast may have brand recognition, but Glanbia will likely still need to persuade consumers to take the SlimFast challenge rather than using other less formal eating plans to lose weight.