- Whole Earth Brands is buying Wholesome Sweeteners, the top organic sweetener brand in North America, for $180 million, the company said in a statement. Wholesome, which holds a 76% share in the organic granulated sugar segment of the organic and natural channel, is eligible to receive up to $55 million of additional payment through the end of calendar year 2021.
- Whole Earth, a flavor and ingredients company, said the purchase would expand its presence in the organic sugar market, increase its scale in natural offerings and boost its cash flow. The transaction is expected to close during the company’s first quarter of 2021.
- This deal marks the second purchase by Whole Earth in the past five weeks. Last month, Whole Earth acquired Swerve, a manufacturer of zero-sugar, keto-friendly, and plant-based sweeteners and baking mixes, for $80 million.
While Whole Earth may not be a household name, several of the brands in its portfolio are, led by Pure Via and Equal. Now the company is expanding its stronghold in sugar and alternative sweeteners with the addition of Wholesome and its organic, plant-based and fair-trade certified offerings, including sugar, honey, agave nectar, allulose and other liquid sweeteners.
U.S. consumers' buying and consumption habits are increasingly dictated by personal beliefs and product attributes. While many people are cutting back on sugar, some shoppers still like to indulge with the popular sweetener or turn to other options, like honey or agave nectar, that they view as being better for them. Other individuals value organic, Fair Trade, plant-based or organic, or ingredients that cater to diets such as Keto.
For Whole Earth, the addition of Wholesome and Swerve gives it a portfolio that can respond to more of these needs. As consumers spend more time baking at home during the pandemic, these ingredients have likely seen a jump in demand. Wholesome, for example, has achieved retail sales growth of approximately 52% during the 52-week period ending Nov. 1, according to SPINS data cited by Whole Earth.
"Consumers are demanding more dietary options that enable healthier lifestyles, and Whole Earth Brands’ business strategy is built on meeting those needs through our innovative product pipeline and global distribution network,” Irwin Simon, executive chairman of Whole Earth Brands and founder of Hain Celestial, said in a statement. "Consumers are demanding more sweetener options that fit within their individual health and dietary needs."
The acquisition also creates a host of other benefits for Whole Earth. In its release, Whole Earth said its legacy businesses, its recent acquisition of Swerve and the pending acquisition of Wholesome create a platform with significant global scale and provide opportunities for strong operational synergies. They give it more shelf presence, visibility with consumers and leverage with retailers. In addition, Whole Earth said Wholesome’s asset-lite production model aligns with its global infrastructure and generates high free cash-flow conversion. This presumably could be used by the company for further deals.
Whole Earth, which became public through a SPAC in June, has been busy making deals of its own during its limited time in the public markets. As the company bulks up, it's not unreasonable to assume more deals are in the works, either in sweeteners, flavors and ingredients, or if Whole Earth decides to develop a presence in food.