Kellogg broadens snack reach with $600M purchase of RXBAR
- Kellogg will acquire Chicago Bar Company, which manufactures the RXBAR clean-label protein bars, the cereal maker announced on Friday. The deal, valued at $600 million, is expected to close by the end of the year.
RXBAR will continue to operate independently as a standalone business and will be able to leverage Kellogg's scale and resources to continue driving its growth.
"RXBAR is a unique and innovative company. Adding a pioneer in clean-label, high-protein snacking to our portfolio bolsters our already strong wholesome snacks offering. RXBAR is an excellent strategic fit for Kellogg as we pivot to growth," said Kellogg CEO Steve Cahillane in a statement. "With its strong millennial consumption and diversified channel presence including e-commerce, RXBAR is perfectly positioned to perform well against future food trends."
This purchase could help inject some energy and enthusiasm into the legacy brand's performance. Sales of Kellogg's well-known cereal products and other morning food items have been down, its snacks segment has been flat and layoffs and other cost-cutting strategies such as eliminating direct store delivery have dogged the company. Transformation has been on the Kellogg agenda for some time.
The trend of larger companies buying smaller ones has been particularly striking in areas that will complement and diversify the buyer's existing portfolio. This acquisition certainly fills that bill. Clean-label foods, especially protein snacks perceived as healthier and better-for-you, are a big draw for millennials and others who tend to reach for these on-the-go items and are much more concerned about what goes in their bodies than previous generations.
Just this year, Conagra bought Colorado-based Thanasi Foods, the maker of Duke's meat snacks, for an undisclosed amount. B&G Foods purchased Back To Nature and SnackWell's snacks from Mondelez and Brynwood Partners for $162.5 million. Last fall, PepsiCo announced it would acquire probiotics beverage manufacturer KeVita, a company it was already intimately familiar with through a minority stake and distribution deal.
The RXBAR line of clean-label protein bars will surely bolster the snack brands Kellogg already owns, including Pringles and Pop-Tarts. RXBAR, available in 11 flavors including chocolate sea salt and blueberry, takes simplicity and a clean label to the next level. The wrapper lists what's inside, including the number of egg whites, almonds, cashews and dates. They provide 12 grams of protein in 210-220 calories, making them a relatively healthy snack that also packs a protein punch.
RXBAR also has launched a kid-friendly line with the same core ingredients but different flavors in smaller portions, so that's another draw for the maker of Rice Krispies, Frosted Mini-Wheats and Fruit Loops.
Peter Rahal, RXBAR's CEO and co-founder, called joining Kellogg "not only a great cultural fit, but it provides us with the tools and resources to accelerate our growth so the brand can scale even faster than it is today."
Besides aligning with today's snack trends, this acquisition shows that Kellogg's brand-new CEO, Steve Cahillane, whom the board appointed last month, brings a more assertive game and is willing to shake things up at the iconic company.