- Mondelēz International announced Sunday it will acquire Tate's Bake Shop, a brand best known for its premium bagged chocolate chip cookies, for around $500 million, according to a company release.
- The brand's sales have quadrupled during the past five years amid consumer demand for its high-quality, real ingredients such as brown cane sugar and butter — value adds that could brighten Mondelēz's health halo.
- Mondelēz expects the deal to close this summer. “Tate’s is a great strategic fit that will complement our portfolio of beloved snacks brands,” Dirk Van de Put, Mondelēz's CEO, said in a statement. “With a unique and authentic brand and truly delicious products, this acquisition gives us an attractive entry point into the fast growing premium cookie segment."
Consumer hunger for simple, better-for-you ingredients is transforming every corner of the food and beverage space — including indulgent categories such as packaged cookies and baked sweets. Mondelēz's pending purchase of Tate's Bake Shop was no doubt made in response to this changing shopper behavior, and the deal could give the international CPG a stronger foothold in the premium dessert space and sweeten its public image.
Mondelēz is known for listening to its consumers, especially when it comes to customization. The company continues to innovate its iconic Oreo cookie by letting customers suggest new flavors for the chance to win cash prizes. The three finalists in the latest Oreo flavor contest — kettle corn, cherry cola and pina colada — rolled out to grocery stores last week.
The tradition of revamping beloved power brands has proven lucrative for the company, driving strong sales in the U.S. Still, it's unlikely that these campaigns can drive long-term, sustainable growth, which is where Tate's Bake Shop comes in. Shopper demand for food made with real ingredients shows no sign of slowing down, and by giving its customers the snacks they demand, Mondelēz could build trust and tap into new growth in both the U.S.and emerging markets.
Once Tate's is folded into Mondelēz's portfolio, the food giant can leverage its distribution network and R&D resources to further scale the brand and get its products in front of more consumers. Tate's will operate as a separate, stand-alone business in order to preserve the brand's authenticity. This could quell any potential consumer fears that the cookie maker will be drastically changed by its new Big Food parent.
Mondelēz's purchase of Tate's isn't the company's first M&A investment into the healthier snack space. In 2015, the company gobbled up Enjoy Life Foods, an allergen-free snack maker that's part of the $12 billion "free-from" product category. While these two acquisitions don't occupy the same segments, they both fall under the larger better-for-you food umbrella, and suggest that Mondelēz is working to better position itself as a leader in both indulgent and health-conscious snacking.
Mondelēz plans to complete a strategic review of its operations by the end of the summer, which could include news about further M&A plans. The purchase of Tate's is a step in the right direction for the company, but it may need to pursue additional acquisitions if it wants to strengthen its sales performance.