RXBAR to unveil new line of products in March
Kellogg, which acquired the maker of RXBAR in October for $600 million, is planning to announce an expansion to its product lineup in March, according to Bakery and Snacks.
Peter Rahal, RXBAR’s CEO and co-founder, said the new products will deliver the same “convenience, brand fee and nutrition." He told Bakery and Snacks that "it's not a line extension of bars.”
Rahal said Kellogg brings its own bar R&D expertise, as well as distribution and execution network, to help his company grow aggressively. Though there are some cautionary tales of startups being bought by Big Food companies, Rahal told the publication Kellogg appealed to him because they “don’t want to fire the founders.”
Kellogg acquired Chicago Bar Company, the parent of RXBAR, last fall, but the company known for its cereal and snacks is already looking to expand the brand's reach. It's not surprising given growing consumer demand for snacks on the go — especially products that have recognizable, healthy ingredients.
Innova research estimates 75% of U.S. consumers claim to read the ingredient labels of food products, while 91% believe those containing recognizable items are healthier. In 2014, Nielsen revealed more than 60% of U.S. consumers cited a lack of artificial colors and flavors as an important factor when making food purchases at the store. Mordor Intelligence research projects the clean label market to reach $47.5 billion in the U.S. by 2023, with a CAGR of 6.8%.
RXBAR, known for bars packed with egg whites, fruit and nuts, could extend its clean label to other product categories, including Kellogg’s flagship item — cereal. Kellogg would be wise to proceed cautiously in expanding the product lineup of RXBAR just a few short months after acquiring it, but the Michigan company already has a deep bench of knowledge on cereal in terms of how to get the product into stores and promote it.
As part of the deal with Kellogg, RXBAR's co-founders stayed on board, operating the brand as a standalone business while leveraging Kellogg’s scale and resources. It's likely that whatever move Kellogg makes will have their approval, or at least that of CEO Rahal, because they know what their customers want and would ensure that however the product line is expanded doesn't destroy what drew fans to RXBAR in the first place.
Even though small food and beverage brands have become hot takeover targets by major manufacturers on the hunt for trendy, more nimble upstarts, that doesn’t mean aggressive post-acquisition growth isn’t without cautionary tales.
Dr Pepper Snapple has struggled to integrate its $1.7 billion purchase of Bai Brands completed last year. After early evidence that it was struggling to integrate the purchase, Dr Pepper dismissed the founder of Bai as CEO and replaced him with a 10-year corporation veteran. Campbell Soup also has faced challenges since acquiring the Bolthouse Farms and Garden Fresh Gourmet brands in 2012 and 2015, respectively.
It's understandable that Big Food companies are eager to expand brands they acquire, in part to get a return on their purchase and boost their own bottom line. While little is known about brand's upcoming announcement, Kellogg would be wise to take it slow and look at past deals in the corporate world involving small companies that have both succeeded and failed — all while making sure that any move they make has the approval of the RXBAR co-founders.