- PepsiCo will buy PopCorners maker BFY Brands, the company announced Monday. Terms of the deal were not disclosed.
- After the transaction closes, the snacks, which include the well known popcorn crisps, Flourish Veggie Crisps and Flex Protein Crisps, will be under the umbrella of Frito-Lay North America. In a press release announcing the acquisition, PepsiCo said it furthers the company's Winning with Purpose initiative to offer consumers more healthy snacks.
- PopCorners is the fastest growing healthier salty snack brand in the U.S., according to a statement about the sale from Permira, the private equity group that formed BFY Brands from a pair of acquisitions in 2015. After the transaction closes, BFY expects to continue operations with factories in Middletown, New York and Liberty, New York, and under the leadership of its CEO Paul Nardone.
As PepsiCo zeros in on boosting its presence in both the snack space and among consumers seeking better-for-you choices, the acquisition of a brand like PopCorners makes sense. It's also been a year since the soda and snacks giant changed its corporate structure, splitting leadership in North America between soft drinks and foods. Since the spring, when Steven Williams became CEO of PepsiCo Foods North America — which includes both Frito-Lay and Quaker Foods — the company had not made an acquisition in the snacking space.
PopCorners was ripe for the picking, and definitely offers lucrative opportunities for PepsiCo. Under Permira, the brand has more than doubled the size of its workforce — from 350 to almost 750 — in four years, according to the statement from the private equity firm. PopCorners is now sold in 40 countries and territories, and has a new R&D center to help create new innovations in the space.
As consumers turn away from sugary sodas — including PepsiCo's namesake beverage — snacking is where PepsiCo has found most of its growth. Compared with a year ago, Frito-Lay North America posted 5.5% revenue growth, according to the company's most recent earnings report. The growth rate was not only the highest of all of PepsiCo's divisions, but Frito-Lay North America also was responsible for 45% of the company's operating profits.
In a call after the most recent earnings report in October, PepsiCo CEO Ramon Laguarta said the company is striving to integrate purpose into its business strategy and brands, and part of that is by offering more healthy choices. While Laguarta did not specifically mention any M&A plans, according to a transcript of the call, he pledged that the company would continue to expand its offerings of more nutritional options.
PepsiCo has been gradually adding healthier items to its portfolio in the last several years. In 2018, the company purchased baked fruit snack maker Bare Snacks. It also bought Health Warrior, which produces plant-based and protein-dense bars, mixes and snacks. That brand operates under the company's innovation program, The Hive. On the beverages front, PepsiCo bought at-home water carbonator company SodaStream for $3.2 billion, and purchased CytoSport — which makes protein powders, shakes and bars under the Muscle Milk and Evolve Protein brands — for $465 million this year.
Given consumer trends, healthier salty snacks are a good place for companies to invest. According to a survey from snacking giant Mondelez earlier this year, almost three in five adults prefer snacking to meals. Innova Market Insights found nearly half of consumers are eating salty snacks between meals in the afternoon, and more than a third in the evening. And almost a quarter of people are replacing lunch with salty snacks.
Other entities are taking note of the growing popularity of this segment. Last year, Hershey bought better-for-you snack maker Pirate Brands, which makes Pirate's Booty cheese puffs. In 2017, the confectioner had bought SkinnyPop owner Amplify. And in October, private equity firm VMG Partners acquired Popchips as the inaugural brand for its new Velocity Snack Brands accelerator platform.
In PopCorners, PepsiCo has found a popular brand that's ready to move to the next level and perfectly aligns with the company's bolt-on acquisition strategy in snacks.