Mergers and acquisitions

Major food makers are poised to accelerate M&A in 2024, with companies such as Mondelēz International claiming to be in “active” discussions.

Once known for consummating big transformational deals, the food and beverage sector has been focused during the last six years on so-called “bolt-on” transactions. These purchases give companies a deeper presence in certain categories without saddling their businesses with huge amounts of debt or the complexities of integrating a new business. 

Executives attending the annual Consumer Analyst Group of New York conference in Florida in February said smaller transactions are likely to remain popular, and they are poised to strike if the right deal comes along.

“We have a pipeline. That pipeline is active,” Dirk Van de Put, CEO of Mondelez, told Wall Street analysts. “There are good discussions going on.”

Van de Put said the Oreo and Ritz manufacturer, which has completed nine acquisitions since 2018 including Tate’s Bake Shop, Perfect Snacks and Clif Bar, looks at 35 or 40 potential M&A targets at the beginning of each year and, if necessary, starts establishing a relationship to build trust and familiarity with the smaller businesses. The majority of them never lead to a deal.

The past few years have seen food makers engage in a handful of billion-plus deals, but in nearly every case it has been with a single company or brand that fills a void within their already burgeoning portfolios.

Last year, jam and peanut giant J.M. Smucker dolled out nearly $6 billion to buy Hostess Brands to deepen its presence in indulgence categories and consumer occasions focused on convenience. And Campbell Soup, which already owns Prego, recently purchased Sovos Brands, the owner of premium pasta sauce brand Rao’s, for $2.7 billion.

Several acquisitions have been smaller, including Hershey’s purchase of two popcorn operations from a co-manufacturer to increase production capacity and flexibility for its SkinnyPop brand. 

Louis Biscotti, the head of the food and beverages group at national accounting and advisory services firm Marcum, told Food Dive recently that CPG companies are hesitant to make too bold of an acquisition. Instead, they are likely to focus on purchases in trendy categories, such as snacking, frozen foods and better for you.

“You start looking at all these different challenges out there right now,” Biscotti said. “They’ll be much more careful and strategic.” 

Jeff Harmening, CEO of General Mills, said the Cheerios and Old El Paso maker has been looking “at a lot of acquisitions” in the past few years but has often been stymied by higher asking prices than his company was willing to pay. 

Before that, General Mills snapped up brands such as Annie’s, frozen pizza crust maker TNT Crusts and pet food offering Blue Buffalo, the latter an $8 billion deal in 2018. 

Harmening is hopeful opportunities for M&A could improve as the food industry moves further away from the effects of the COVID-19 pandemic, which boosted demand for some offerings and temporarily elevated the value of several businesses. At the same time, higher interest rates could deter involvement from private equity firms. Together, these changes could place General Mills in a better position to capitalize.

“I think it sets up for a pretty good environment for somebody like us,” Harmening said. “We'll remain disciplined.”

Van de Put said he is often asked if the current economic turmoil has helped bridge the divide between the price sellers are seeking, and what companies like Mondelēz are willing to pay. So far, that hasn’t been the case, with asking prices in many cases actually going up.

“They're becoming more expensive because there's more interest,” he said. “We will not force it. ... We’re trying to let it run its course in a natural way without going crazy.” 

Hershey CEO Michele Buck also said the sweet and salty snacks maker continues to evaluate potential acquisition opportunities. The Reese’s and Kisses maker has a strong balance sheet that gives it the flexibility to make a deal if it finds the right target. Hershey has set its sights on scalable brands with strong margins that allow the Pennsylvania company to reach incremental consumers or occasions.

The last major purchase for Hershey came three years ago when it bought the fast-growing Dot’s Homestyle Pretzels and its Midwest co-manufacturer Pretzels Inc., for $1.2 billion — a combined deal that was the second-largest transaction in its history and further broadened the company’s salty snacks portfolio.

Some companies are still digesting the debt they incurred from deals several years ago. Sean Connolly, CEO of Slim Jim and Healthy Choice manufacturer Conagra Brands, said the Chicago-based company is focused on paying down debt it took on as part of its $10.9 billion purchase of frozen food maker Pinnacle Foods in 2018.

Still, Connolly added that Conagra wouldn’t turn down the right deal if it made strategic and financial sense. It’s eyeing opportunities in snacks and frozen; two categories that currently make up two-thirds of its $14 billion in retail sales during the last year.

“I can't see us pursuing any sizable acquisitions these days, because debt reduction is a priority,” he said in an interview. “We could look at smaller bolt-on stuff at some point.”

ST. LOUIS — When Post Holdings employees arrive at the company’s headquarters, the food manufacturer's storied 128-year history is on full display.

The decades-long evolution in packaging for three of its signature brands — Sugar Crisp, Fruity Pebbles and Honeycomb cereals — is spotlighted inside a black rectangular frame on the first floor. Workers showcase miniature toy trucks, special-edition cereal boxes, champagne bottles and other mementos that commemorate achievements and celebrations.

Rob Vitale, Post’s chief executive officer, has six black and white photographs hanging in his office revealing key moments in the company's history, such as images of the original factory and the house where the company was established in Battle Creek, Michigan, more than a century ago. 

“I’m a history buff. So in one way, I look back a lot,” Vitale said during a 90-minute interview. “We’ve got one of the best corporate histories around [that is] particularly colorful.”

Despite Post’s close connection to the past, the food manufacturer isn’t one to live in it. 

Under the leadership of Vitale and his mentor and predecessor Bill Stiritz, Post has transformed itself from a company selling only cereal into a sprawling CPG conglomerate manufacturing everything from peanut butter and mashed potatoes to liquid eggs and dog food.

Post has found success through an unconventional strategy of building and managing its businesses in a way that is more akin to a private equity firm than a publicly traded company with roughly $6 billion in annual sales. This approach, Post executives say, keeps the company nimble and better positions it to go head-to-head with much larger challengers in the fiercely competitive food space.

“One of the things that Bill taught me early on is to think your own thoughts,” Vitale said. “Don’t just go to what everyone else is doing and say, ‘Okay, because the rest of the pack is doing it that way, we’re going to emulate them. ’ ”

‘The Wild, Wild West’

Post traces its roots to 1895 when C.W. Post started the Postum Cereal Company and two years later launched Grape-Nuts, one of the first ready-to-eat-cold cereals. Since then, Post has been owned by several large businesses following a series of mergers and spinoffs, including tobacco giant Phillip Morris and Kraft Foods.

In 2012, private label food manufacturer Ralcorp Holdings spun off its branded division to create today’s Post as a standalone company. 

The debut marked the beginning of a new chapter for the Fruity Pebbles manufacturer, but one that left its executive team, led by CPG industry veteran Stiritz and Vitale, then its CFO, with little time to enjoy the company’s newfound independence. Post was the third-largest cereal maker in a struggling sector where it was pitted against category leaders General Mills and Kellogg. 

“It was not a transaction for the faint of heart,” said Lowell Strug, the global head of consumer and retail investment banking at Barclays who has worked with Post on three acquisitions since 2018. “Spinning off as a pure play in a declining category, that could have gone horribly wrong.” 

Post started life on its own with fewer than a dozen corporate employees. 

Diedre Gray, now Post’s executive vice president and general counsel, said when the company moved its headquarters into the home of a defunct pharmaceutical firm, workers initially did not have trash cans at their desks and the office lacked printers.

“It was really the Wild, Wild West in here at that time, but it was pretty exciting, too,” she said. “We had this real history with the Post brand and the cereals. At the same time, we were totally a startup.”

Executives working at Post at the time of the spin off, many of whom remain at the company today, said they were aware that despite its recognizable cereal business, Post couldn’t stake its future on that alone. It needed to look for acquisitions to grow the company, and quickly, or it wouldn’t be long before Post would find itself as the target of an opportunistic buyer.    

“We needed to do it because if we didn’t, we weren’t going to be a standalone company for very long,” said Jeff Zadoks, Post’s executive vice president and chief operating officer, who started the same day as Vitale in 2011. “We were third in a shrinking category. As a public company, that’s not a recipe for success. We had to be active.”

Since Zadoks joined Post, the company has completed more than 20 acquisitions. It has been one of the most active buyers during that period across the food industry — a notable feat in a sector where access to cheap capital and the urgency to move deeper into trendier categories has accelerated the pace of M&A.

Post’s Chief Financial Officer and Treasurer Matt Mainer said he was drawn to the company in 2015 by its pace of deal-making and the financial complexity of some of its transactions. “In the eight years I’ve been here, I’ve done more than most people do in a career,” he said.

Post Holdings' key acquisitions from 2012 - 2023

Becoming an acquisition powerhouse

After the spin off, Post tried building scale in cereal where it had expertise. Early on, Stiritz reached out to PepsiCo to inquire about purchasing its Quaker Oats business, which included brands like Cap’n Crunch and Life.

When PepsiCo rebuffed its interest, Post searched for other opportunities in cereal and adjacent categories. But with only so many options available, it had to pivot to look for other acquisition opportunities.

Post benefited from Stiritz and Vitale’s close connections with investment bankers who made it possible for nearly “every opportunity in food” to be pitched to the company, Zadoks said. Executives scoured the market, assessing potential deals in a wide range of categories including vegetables, snacks, potatoes, peanut butter and beverages.  

Zadoks recalled having reservations that the company wasn’t ready to digest some of the bigger acquisitions being considered until it had time to build out its own business and hire additional employees.

“There were some deals early on that, had we landed them, I was fearful we would have crumbled under the weight of those deals,” he said. 

While Post eschewed large M&A deals, it quickly became one of the most aggressive food companies in the industry. 

From the time of the spin off until the end of 2014, Post gobbled up nine businesses, including Premier Nutrition, a seller of high protein shakes and bars; portable energy offering PowerBar; a range of private label nut butters, cereal and granola; and Michael Foods, a manufacturer of egg products and refrigerated potatoes for the foodservice industry.

In the years that followed, Post remained aggressive by averaging about one deal each year.

The company finally expanded its cereal business through the $1.2 billion purchase of MOM Brands in 2015. Two years later, Post completed its first foreign acquisition with the addition of Weetabix, the top-selling cereal in the U.K., for nearly $1.8 billion. 

Even the long-awaited cereal deals haven't slowed Post's appetite for M&A. In 2018, it entered refrigerated meals by acquiring Bob Evans Farms, a producer of refrigerated potatoes, pasta, pork sausage and other side dishes, for $1.5 billion. 

And in April of last year, Post purchased Rachael Ray Nutrish, Kibbles ’n Bits and other pet foods brands as part of a $1.2 billion deal with J.M. Smucker, marking its first time selling products outside of human food. 

Scott Harrison, a portfolio manager at Argent Capital Management in St. Louis, whose firm has owned Post’s stock since it was spun off, said the company’s successful history of creating value through M&A has “earned the trust of shareholders … who give them the benefit of the doubt.”

“You never know what category [Post] may enter,” Harrison said. “The fact that they would take on a new category and see an opportunity where others may not see that is not surprising. And it's actually, in our view, it’s a strength.”

The acquisition binge has led to the creation of a business that has a commanding presence in many facets of the food landscape.

Post participates in eating out (foodservice) and food at home (cereal and refrigerated retail,) as well as branded and private label items. The diversified mix gives the food producer exposure to categories that may be in demand at any given moment and provides it with a buffer to other segments that are facing challenges. 

In addition, Post’s cash-steady, slower-growing businesses, like cereal, complement areas such as refrigerated retail where it has traditionally experienced higher rates of growth and volatility. Logistics also is a major beneficiary of Post’s business model, with the company able to save money by transporting heavy foods (peanut butter and pet food) and light foods (cereal) on the same truck. 

Even before Post closed the pet food transaction with Smucker, Vitale, who estimated he’s mulling over four to five potential deals at any one time, said he and his management team were already searching for their next acquisition. Rarely a week goes by, he said, without a pitch on a new company or brand Post should look into buying. 

“We’re always looking for new opportunities. It’s exhilarating,” said Vitale, who pointed out that some transactions can take years to complete. “You have to resist it at times because it’s an addictive experience and you have to make sure that you don’t get caught up in the process and make a bad decision.”

Embracing an unorthodox strategy

Post touts on its website that it’s “not your usual” CPG company — and for good reason. Unlike other food manufacturers, Post employs a different tactic for managing its cash and structuring its business.  

“Too much equity gets trapped in these big [food] companies,” Vitale said, noting they often prioritize having top investment-grade credit ratings and paying generous dividends to shareholders.

Post, which doesn’t pay a dividend and carries a higher amount of debt than its competitors based on its net leverage, values cash-generating businesses over ones that provide a short-term bump to earnings. The company also doesn’t prioritize building scale in categories where it already operates. 

Instead, it favors owning businesses that have similarities, or where synergies are created with its existing operations — a strategy highlighted by Post’s recent move into pet food. Along with shipping advantages, human and animal food use some of the same ingredients, allowing Post to increase its purchasing power. 

The strategy gives Post easier access to cash that it can use for acquisitions, stock buybacks or paying down debt —  a mix it can shift around depending on its needs at a particular moment, executives said. If Post requires cash for an acquisition, for example, the food manufacturer can slow or stop buying back its stock.

Erik Gordon, a business professor at the University of Michigan, said Post is organized in a way that allows it to tap into benefits available to both public and private companies. 

As a public corporation, Post has more opportunities to raise capital. At the same time, the private equity-like attributes embedded in its business model reveal a company that is focused on generating a prolonged period of sustained growth even if there are near-term disruptions.

“They seem to be careful in capital allocation,” Gordon said. Post “hasn’t made any big missteps. They have a strategy that seems plausible, and so far, they seem to be executing it.”

Post’s stock price, at $106 per share today, has soared about 300% from the time of its separation from Ralcorp, a rate of growth that excludes the recent divestiture of its nutrition business.

Sales during the same period have jumped from $1.03 billion in 2013, its first full fiscal year as an independent company, to nearly $6 billion last year. This total does not include about $2 billion in sales from businesses that were divested or separately capitalized during that time.

Despite Post’s penchant for acquisitions, the food manufacturer hasn’t been shy about selling or divesting parts of a business if it can get a good price, or if the underlying asset, in its view, isn’t being fairly valued by the market.

In 2018, Post transferred its private label business to a new subsidiary called 8th Avenue Food & Provisions. It received $250 million from private equity firm Thomas H. Lee Partners in exchange for a 39.5% stake.

The following year, Post took public BellRing Brands, the manufacturer of protein shakes, powders, bars and other offerings.

After spending about $700 million on BellRing during its time owning the business, Post estimated it has generated after-tax proceeds of $2 billion and another $2 billion for shareholders through the IPO and subsequent spin off of BellRing in 2022. 

“There’s a certain amount of disincentive [in corporate America] to become smaller, even when becoming smaller is the most shareholder-friendly thing to do,” Vitale said. “We try to play past that. We’re not afraid to become smaller.”

A hands-off approach

Post is divided into five segments that are run independently. The largest, Post Consumer Brands, oversees cereal, Peter Pan peanut butter and pet food. 

The other four are Weetabix; Bob Evans side dishes; its foodservice operation and its private label unit.

Nicolas Catoggio, president and CEO of Post Consumer Brands, said the ability to run his own division while tapping into the resources of the parent company was the primary reason he left a nearly 15-year stint as a consultant to join Post in 2021.

“This creates the perfect environment to feel supported,” Catoggio said. “For the most part, I run this business as my business. And I love it.”

Each operation has a management team that reports to Vitale, along with its own supply chain, IT department, human resources, marketing, legal and finance divisions. 

Post could “really wring out costs” if it combined some of those functions across the company, but the decision would likely generate unwanted complexities that outweigh any potential savings, Vitale said.

“The downside is you now have a bigger organization, and bigger organizations tend to be less agile, less nimble, less responsible to both the consumer and the customer,” he added.

Few businesses within Post have benefited more from its hands-off approach than BellRing.

During its early days as a public company, one of Post’s first acquisitions was Premier Nutrition, the food and beverage protein maker that laid the foundation for what later became BellRing.

But Premier Nutrition, located in California, was growing much faster than Post’s mature cereal business. It also possessed a noticeably different culture. Premier Nutrition employees regularly brought their dogs to work, and each week the company would spotlight the life journey of a coworker, a stark contrast to the more buttoned-up mentality at Post’s headquarters in Missouri.

Premier Nutrition also was the only Post division to use an asset-light model that depended on co-packers to manufacture its products. 

Darcy Horn Davenport, who was with Premier Nutrition as its vice president of marketing when the acquisition occurred, said the company was “definitely the small guy in all of Post’s divisions” with roughly $180 million in sales at the time of the purchase.

But rather than incorporate Premier Nutrition into one of its other holding companies to cut expenses and boost margins, Post allowed it to keep its existing departments in California, retain nearly all of its 50 employees and maintain its valuable co-packer model.

“We were nervous that exactly what we had seen play out across other big CPGs would happen,” said Davenport, now BellRings’ CEO. “But they kind of encouraged us to continue on the path [we were already on.] That has been key to our success and growth now as a publicly traded company on our own.”  

Vitale remains convinced if Post had moved Premier Nutrition from California and forced it to follow in lockstep with the cereal maker’s way of doing business, it would “have been disastrous.” 

“The gravitational pull of synergies would have destroyed the culture of Premier,” Vitale said. “Too many times I think acquisitions go poorly, not because the acquisition is a bad idea, but the synergy realization destroys much of what was good about the company [being purchased] to begin with.”

Playing close to the edge

The synergy-realization philosophy has prompted Post to scuttle potential deals of businesses it was interested in acquiring. Several years ago, Post was evaluating whether to buy a company that would have expanded the food manufacturer’s breakfast offerings.

Vitale, who envied the niche this young business had carved out in the better-for-you food space, recalled a meeting to talk about a possible acquisition. Just before the discussion was about to start, four people from the young company entered the room, all of them dressed in flannel shirts, talking alike and the three men sporting long beards — evidence, Post executives said, of the strong culture permeating from the business.

While a purchase met many of Post’s criteria, the only way the larger food maker could have justified the price the company was asking for was by integrating it into the rest of its business to cut costs. Vitale recognized that kind of change would have destroyed the company’s culture — part of which made it an attractive acquisition target in the first place.

Post ultimately walked away from the deal.

“We approach things with enough humility to know that if we’re going to buy something because we’re attracted to it, the first thing we ought not to do is try to make it look like us,” Vitale said. 

Hank Cardello, a food industry expert at Georgetown University’s McDonough School of Business and a former brand manager at General Mills, said Post has assembled a portfolio of “strong brands.” 

The risk Post runs into, he warned, is that further deals spread the company too thin and make it difficult for the food manufacturer to stay focused. 

Cardello said Post would be better off strengthening its presence across key portions of its business, such as cereal and pet food, where it can extract advantages through improved margins, ingredient procurement, production and distribution.

Last October, Post announced it would complement its existing branded pet food business by spending $235 million to acquire a manufacturer and packager of private-label and co-manufactured products. 

“If you like to do deals, great, but I’d focus on deals that buttress your position in core categories where you have expertise,” Cardello added. “Their long-term success, or financial success, would probably be helped by going deeper into their core categories.”  

Harbir Singh, a professor at the Wharton School of the University of Pennsylvania, said Post needs to keep “renewing its portfolio” to keep it fresh. Following the spin off of BellRing, Singh said Post’s portfolio is missing a meaningful presence in nutritious, better-for-you products. 

Still, Vitale said Post remains a company in motion that is not afraid to take risks, even if they backfire or create the inevitable second guessing. 

He remembers deals, such as Bob Evans, that were consummated but could have created even more value if they were done differently. And while Vitale remains proud of Post’s M&A track record, he still laments deals the company didn’t make that have proven lucrative for their eventual buyers. 

“I don’t have many regrets of anything we have done. There are numerous examples of deals that I wish we had done that we didn't do,” Vitale said, declining to discuss in detail those missed transactions. “Our ‘should have’ portfolio [of companies we didn’t acquire] is pretty impressive.”

Post has even looked for different ways to engage in M&A. Last May, Post unwound the blank check company it established during the height of the SPAC boom two years ago after failing to find an acquisition target in the CPG space. Post lost about $10 million on the bet, the amount of money it spent to organize and capitalize the SPAC. 

“We don’t fear experimentation and failure. If you don’t screw things up, you’re not playing close enough to the edge,” Vitale said. “We always think about ... what is the next move. I feel a tremendous amount of excitement to see how far I can take us.”

News Graphics Developer Julia Himmel and Visuals Editor Shaun Lucas also contributed to this story.  

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Chobani purchased coffee roaster La Colombe for $900 million in December, the Greek-style yogurt giant said in a statement.

Keurig Dr Pepper, which paid $300 million for a 33% stake in La Colombe in July, will exchange its stake in La Colombe into Chobani equity.

The purchase gives Chobani a deep presence in the fast-growing ready-to-drink coffee category and enables the dairy firm to build on its efforts to become a more diversified food and beverage company.

Chobani has spent much of the last several years using the Chobani name to extend its reach into other categories, including oatmilk, cold-brew coffee, probiotic beverages and coffee creamers.

While Chobani is unlikely to abandon that strategy, the move to buy La Colombe will enable the 18-year-old New York company to add another well-known brand to the mix that can serve as a platform for growth.

The decision to bring the two brands under the same corporate entity also could lead to some natural synergies, such as the use of Chobani creamers in La Colombe coffees and the sale of Chobani’s yogurts or use of its oatmilks in La Colombe’s brick-and-mortar locations. La Colombe currently serves consumers across multiple channels, including retail, cafes, foodservice and direct-to-consumer.

Chobani could even market the brands together, encouraging shoppers to have a ready-to-drink La Colombe with their cup of yogurt.

Despite challenges impacting companies in the food space, Chobani appears to be managing through much of the industry’s current difficulties. Chobani founder and CEO Hamdi Ulukaya said in a statement that his company has delivered double-digit, volume-led sales growth and “considerable” margin expansion.

“We have never been stronger or better positioned to chart our next chapter of growth," Ulukaya said  "We've already made an investment in the coffee category with our creamers and are excited about bringing La Colombe into the Chobani family.” Ulukaya is no stranger to La Colombe. He is the majority owner of the brand.

In 2023, the market for ready-to-drink coffee worldwide was projected at $33.4 billion, according to data from Statista. The category is forecast to post a compound annual growth rate of 5.79% through 2027. Building a deep presence in this popular ready-to-drink coffee category could only help to further accelerate Chobani’s growth. 

Chobani noted that La Colombe is a growing player in the $5 billion U.S. ready-to-drink category, and its offering will prove “highly complementary” to Chobani. Colombe's ready-to-drink line has grown more than three times in the last five years and is “positioned for accelerated growth.” Chobani added that La Colombe will benefit from its extensive retail execution, marketing and cold chain capabilities to grow its multi-serve offering.

An equally valuable part of the deal is keeping Keuirg Dr Pepper in the fold. The beverage giant, which recently debuted La Colombe K-cups for its Keurig platform, has a strong distribution network for its sodas, waters and other drinks. La Colombe will benefit by tapping into that relationship to expand its presence in convenience stores and other retail establishments. 

Under Chobani’s ownership, and with help from Keuirg Dr Pepper, La Colombe will undoubtedly accelerate its growth faster than it would have been able to on its own, and be better positioned to compete against other established ready-to-drink products already on the market, including Coca-Cola’s Costa Coffee and PepsiCo’s Starbucks.

Campbell Soup has positioned itself as a “very compelling story” in the food space following its $2.7 billion purchase of Rao’s parent company Sovos Brands, a top executive said in an interview.

Mick Beekhuizen, Campbell’s president of its meals and beverages division, said the addition of pasta sauce maker Rao’s and Michael Angelo’s frozen meals gives the 155-year-old company a competitive presence in fast-growing premium sector. It also complements its more established portfolio, including its namesake soups and V8 juices, as well as its burgeoning snacks business of Goldfish crackers, Pepperidge Farm cookies and Late July chips.

The purchase, the largest for Campbell Soup in six years, closed in March. It was first announced last August, but the closing was delayed after the Federal Trade Commission requested more information.

“This is a historic day for us as a meals and beverages division but also Campbell’s as an organization,” Beekhuizen said. “We have these iconic brands in our portfolio, but adding these premium brands to that portfolio ... now you’re starting to create a very compelling story.”

Campbell's CEO Mark Clouse said the meal and beverage portfolio's premium business would rise to about 25% with the new brands, an increase from around 10% before the deal.

The crown jewel of the purchase is the fast-growing Rao’s brand. Its product list includes sauces, dry pasta, soups and frozen meals. Rao’s sales surged 37% last year, and it was responsible for three-quarters of Sovos’ $1 billion in sales in 2023. 

Campbell’s also adds to the mix Noosa yogurt following the Sovos purchase. The soups and snacks maker reiterated plans Tuesday to evaluate strategic alternatives for the dairy brand. 

With the deal complete, Campbell’s establishes a “distinctive brands" unit within its meals and beverages division. It will focus on the premium segment where growth is outpacing recent increases in its core offerings. Distinctive brands include the recently acquired Sovos portfolio, as well as Campbell’s organic Pacific line that been an area of strength.

“I want to make sure that we maintain the growth trajectory that Sovos has,” Beekhuizen noted. “We’ve got to continue to make sure we stay focused on that in order to continue to bring the excitement to the consumer, which Sovos has done really well.”

Sovos has prioritized purchasing disruptive brands with recognizable ingredients. The company then innovates the core offerings while expanding them into other areas — for example, Rao’s into soups and frozen pizza and Noosa into gelato.

Sovos’ products complement offerings Campbell already has in its portfolio. Rao’s pasta sauce, for example, will complement its mainstream Prego offering, while Rao’s soups will join the Campbell Soup brand and Pacific.

The acquisition will greatly enlarge the scale of Campbell’s, best known for its shelf-stable products, in frozen. Prior to Sovos, its frozen presence was focused on its Pepperidge Farm brand.

“We’re going to continue to build upon that and continue to use that as one of the areas of growth,” he said. “How can we continue to build upon those innovations that are working?”

Coca-Cola has struggled to integrate its $5.6 billion purchase of BodyArmor, CEO James Quincey told analysts last February.

The purchase of the fast-growing sports drink, the largest acquisition in the company’s history, led to more “disruption in the short-term” than expected, Quincey said. The Atlanta-based beverage giant is optimistic it will reset BodyArmor and the brand will complement its other big offering in the sports-drink category, Powerade.

Coca-Cola acquired a 15% stake in BodyArmor in 2018 for an undisclosed amount. It announced in late 2021 it would purchase the remaining 85% of the brand as it expanded its beverage offerings.

When Coca-Cola first invested in BodyArmor six years ago, the upstart had about $250 million in sales.

In 2021, when it purchased the rest of the brand, that figure soared to more than $1 billion. The fast-growing, healthier-positioned sports drink caught on with consumers through its use of coconut water, low sodium and high potassium levels, the absence of artificial colors and including sugar in place of high fructose corn syrup. 

While the future for BodyArmor remains upbeat, Coca-Cola admitted to some early challenges in integrating the fast-growing brand into its existing network as it aims to better compete against industry heavyweight Gatorade, owned by PepsiCo. The purchase of the better-for-you sports drink by Coca-Cola amounted to a big bet that the beverage would play a key role in building out its liquid offerings and reposition the business into a “total beverage company.”

BodyArmor’s sales declined initially as the beverage company integrated the startup brand with Powerade, Quincey told The Wall Street Journal. 

Coca-Cola has overhauled its portfolio in recent years, shutting down or selling brands such as Honest tea, Tab soda and Zico coconut water to focus on more profitable, faster-growing products. At the same time, it acquired Topo Chico premium sparkling mineral water, purchased the remaining stake in Fairlife and doled out $5.1 billion to add Costa Coffee. 

It also entered into deals with Molson Coors and Brown-Forman to bring brands such as Topo Chico into the alcohol category. The partnership with Brown-Forman will create a ready-to-drink cocktail combining Jack Daniel’s Tennessee Whiskey and the iconic soda brand.