Mergers and acquisitions

Food and beverage companies are unlikely to strike multi-billion dollar transformative M&A deals this year, with giants such as Kraft Heinz and Molson Coors focusing on smaller acquisitions that keep their finances in check while building exposure in categories such as better-for-you snacks and functional drinks. 

The food space has largely shifted to so-called “bolt-on” deals in recent years as companies adopted a more disciplined approach after some large transactions during the 2010s failed to meet optimistic targets and left companies saddled with billions of dollars in debt.

Tracey Joubert, CFO with Molson Coors, said at the Consumer Analyst Group of New York’s (CAGNY) annual conference in Orlando last month that the beer giant will continue its successful “string of pearls” strategy for acquisitions or partnerships that prioritizes brands playing in categories where it lacks or has a limited presence. The transactions also must be big enough that Molson Coors can use its heft to scale the business.

Molson Coors in January took a minority stake in nonalcoholic carbonated mixer Fever-Tree, the latest deal to build on its strategy of increasing its exposure beyond beer. The transaction came two months after Molson Coors purchased a majority of Zoa, the better-for-you energy drink co-founded by Dwayne “The Rock” Johnson.

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, The Campbell’s Company closed a $2.7 billion deal for Rao’s sauces maker Sovos Brands, while PepsiCo doled out $1.2 billion for Mexican-American food maker Siete Foods. And Hershey purchased Sour Strips, a sour candy brand with a strong presence on social media.

Executives at CAGNY said they have improved their balance sheets and remain on the lookout for opportunities to reshape or improve their portfolios.

“When it comes to portfolio management, our priority is to do M&A that strengthens and accelerates our organic growth strategy ... with a bias towards bolt-ons,” Andre Maciel, Kraft Heinz’s CFO, told analysts.

Few companies have been as active in recent years as Hershey. The Reese’s and Kisses maker has used M&A to build its $1.1 billion salty snacks portfolio, snapping up Dot’s Pretzels, SkinnyPop popcorn and Pirate’s Booty puffs.

“M&A has played a key role in our growth over the years and really getting to that optimal portfolio, because it all starts in competing by having the right portfolio,” Michele Buck, Hershey’s CEO, said at CAGNY. “We will continue to use M&A as a way to expand our portfolio.”

Billy Roberts, a senior food and beverage analyst with CoBank, told Food Dive earlier this year he expected dealmaking to pick up. Last year averaged fewer than 500 deals per quarter, a nearly 40% decline from the 2021 to 2023 period, the cooperative bank noted in a report last November.

He predicted M&A would accelerate due to lower interest rates, fewer outside distractions for companies and a need to improve margins and growth since inflation-weary consumers are less tolerant of price increases.

“There are quite a few opportunities out there for M&A activity,” Roberts said. “We could see some smaller entities really get picked up, particularly in a couple of different categories” like snacking and plant-based alternatives.

When Hormel Foods spent $3.35 billion four years ago to buy Kraft Heinz’s snack nut portfolio, much of the attention was paid to the crown jewel of the transformative deal: Planters nuts.

And for good reason. Planters was nearing $1 billion in sales and would immediately become one of Hormel’s best-selling products, surpassing other portfolio staples such as Spam, Jennie-O turkey and Justin’s peanut butter.

But included in the mix was a brand Hormel viewed as underappreciated and one it was confident it could turn around. 

The brand was Corn Nuts, a crunchy snack created during the Great Depression for bars and taverns. For years, Corn Nuts seemed to lack direction as Kraft Heinz prioritized investing in its better-selling cousin Planters, which caused the smaller brand to languish. 

“There was a recognition that this was kind of like a diamond-in-the-rough-type situation where you had a really simple business in corn and a lot of opportunity for growth,” said Patrick Horbas, market director for Corn Nuts and Planters, who came to Hormel from Kraft Heinz following the purchase. “With a little bit of focus, attention and additional excitement, it could be something more than it was.”

When the now 89-year-old brand was acquired by Hormel in 2021, it had a dominant presence in convenience stores but lacked meaningful exposure in other channels, such as grocery, where it could tap into growing consumer interest in snacking. The item also had largely saturated markets in the western U.S., close to its home state of California.

Hormel was determined to get Corn Nuts into more retail outlets and broaden its reach to other parts of the country, such as the East Coast. It also set out to deepen its focus on innovation. One of Corn Nuts’ most valuable assets is the snack’s ability to carry flavor due to its unique shape.

The brand has four main flavors — Original, Ranch, BBQ and Chile Picante Con Limon.  Hormel aims to introduce a new limited-time Corn Nuts flavor every year that taps into an existing market trend before determining whether to scale it, Horbas said. Kickin’ Dill, Loaded Taco and Mexican Street Corn are just a few limited-time offerings that have become permanent fixtures in Corn Nuts’ lineup. 

“A corn kernel is a great canvas for a lot of things,” Horbas observed. “It’s always tough when you have so many flavors that can go on something, you have to think it through.”

Since acquiring the Corn Nuts brand, Hormel “has seen strong momentum across key metrics,” including household penetration, sales, volume and distribution, according to a company spokesperson.

Hormel is exploring other opportunities for the brand. In May, it ventured beyond its traditional offering for the first time with Corn Nuts Partially Popped, combining the signature crunch of the snack with the light, airy texture of popcorn.

Horbas said Hormel could take Corn Nuts further beyond the iconic crunchy kernel and into other forms. 

“It’s a little risky,” Horbas said about expanding Corn Nuts into new formats. “The upside is much larger, too, but you’re introducing something new. It takes a lot more education in the space. It takes a lot more trial of the product. But I would say those things are always on our mind.”

Sponsored content

By Catena Solutions

Navigating mergers and acquisitions is notoriously difficult, with most deals falling short of expectations. In fact, studies show that 70-90% of M&A activities don’t achieve anticipated results. While financial and operational factors are essential, leaders shouldn’t overlook the importance of branding.

In the food and beverage industry, branding directly influences consumer loyalty and market positioning. Neglect it during a merger or acquisition and face confusion, eroded trust, and diminished value. On the other hand, a strong brand strategy can unlock growth opportunities and strengthen market presence.

Read on for tips to make branding a top priority during your deal.

Give branding a seat at the table

Branding often takes a backseat during M&A as leaders focus on operations and logistics. However, branding deserves a seat at the table from the start.

A study from the American Marketing Association found that the right brand strategy can increase post-M&A company value by 23%, while the wrong one can put up to 19% of that value at risk. That’s a potential 42% swing tied to branding.

Ignoring branding can cause major challenges post-deal. Consumers form emotional connections with brands, especially in food and beverage, and changes can disrupt loyalty. Remember that your brand is your direct relationship with customers and give it the attention it deserves.

Make gradual changes to products and packaging

During times of change, consumers need reassurance about product consistency. Sudden shifts in packaging or product design can unsettle skeptical consumers and drive them away.

If changes are necessary, introduce them gradually to give consumers time to adjust. This is especially important for packaging, which heavily influences purchasing decisions—72% of Americans say packaging design impacts what they buy.

Refresh packaging strategically and reassure customers with a commitment to consistency. Additionally, prioritize brand awareness, clear messaging, and reinforcing positive associations. Times of M&A can also be an opportunity for a strategic brand refresh, building on what works and refining what doesn’t.

Decide on a brand strategy

There are a few ways to handle branding during an M&A deal, and the right approach depends on brand equity, market share, and consumer loyalty. Key strategies include:

• Maintaining separate brands
• Co-branding during a transition (e.g., “Brand A, now part of Brand B”)
• Integrating right away, with one brand ceasing to exist
• Creating a new brand under a different name

In the food and beverage industry, we see a mix of these methods. When companies merge, major brands often retain their individual identities that consumers have grown to know and love. For example, when Mars announced the Kellanova acquisition last year, they reassured consumers that their iconic snacking brands would remain the same.

Craft a compelling narrative

Storytelling should be a key part of M&A communications, especially if the strategy involves a branding shift. Consumers will naturally question the reasoning behind the change, and it’s the company’s job to reassure them.

When creating communications, highlight shared values and be transparent about the reasons for the merger or acquisition. This will help consumers understand the transition and feel considered in the decision-making process.

For example, when PepsiCo announced the acquisition of Siete Foods, the messaging emphasized expanding positive choices for consumers without compromising taste. This approach kept consumers informed, reinforced why the deal strengthened both brands, and positioned the company for growth.

Engage internal and external stakeholders

One of the biggest mistakes in the M&A process is assuming what stakeholders want. Making decisions in a vacuum can lead to misinformed choices based on inaccurate assumptions.

In the food and beverage industry, consumers increasingly expect a say in brand decisions, craving control, personalization, and transparency. Internal stakeholders, who know your brand inside and out, can serve as valuable sounding boards. Throughout the M&A process, collect feedback and perspectives from customers, partners, suppliers, and employees.

This input helps shape brand strategy and ensures stakeholders get what they truly want. This is increasingly important, as 82% of shoppers want a consumer brand’s values to align with their own. An added benefit? Innovation. Great ideas can come from anywhere, and you never know what your brand’s next big idea will be.

Start brand planning early for M&A success

In the food and beverage M&A space, preparation is everything. Too often, mergers and acquisitions are finalized before brand strategy is even considered. Waiting that long is a recipe for disaster, especially since finding the right strategy can require multiple iterations.

In the high-stakes world of M&A, companies don’t get multiple chances to get branding right. A well-planned brand strategy can mean the difference between a seamless transition and a loss of market trust. By prioritizing branding early, businesses can maintain customer loyalty, protect brand equity, and set the stage for long-term success.

As companies look for an edge in launching products in a market where failure is almost inevitable, a growing number of businesses are turning to an unlikely source for an edge: Discontinued brands pulled from the market years ago amid plunging sales and increased competition. 

Slice soda, discontinued by PepsiCo more than 20 years ago, is one of the latest products to turn back the brand time machine. It was relaunched in January by Suja Life, known for its organic juices and boosters, as a better-for-you offering in the sparkling beverage space.

In buying “a powerful brand” like Slice rather than building its own from scratch, Suja wanted to “hit the gas” and “not have to spend time building up the brand,” said Jamie Berle, director of brand marketing at Suja Life. 

“We know what it takes to build a brand from the ground up," Berle said. "It’s not easy.”

Slice isn’t the only brand returning from beyond the grave. Jolt Cola, Odwalla smoothies and Hydrox cookies have all returned to retail shelves in hopes of using nostalgia to attract former buyers while drawing in a new generation of consumers. 

Industry experts warn that bringing back a discontinued product can bring its own set of challenges. Companies must appease legacy consumers who fondly remember the product a certain way while making changes to attract a new, younger customer base. 

“It’s certainly a tactic,” said Mike Kostyo, a vice president at consulting firm Menu Matters. “It’s a way to get attention, but the odds are kind of stacked against it.”

The easy way in?

About 15,000 new food products are introduced each year, according to Kansas State University, though the majority fail to take off. Some studies estimate 90% of new products launched meet their demise within the first 12 months. 

By turning to a brand that has been off the market — sometimes for decades — food and beverage executives say they can tap into a name recognizable among many consumers and help jumpstart a costly development process where failure is the most probable outcome. 

Slice’s brand awareness, for example, is nearly 50% with consumers between 35 and 44, the shopper base that grew up with the soda and is increasingly craving nostalgia, according to Suja.

Younger consumers have shown a penchant for turning to retro brands such as Slice. 

Even if people didn’t grow up with the offering, there may be inherent interest in trying it — especially if the product now contains better-for-you ingredients, comes in sustainable packaging or promotes other attributes that weren’t as relevant to consumers the first time around.  

In the soda’s updated version, Suja added a combination of prebiotics, probiotics and postbiotics. It also has 5 grams or less of sugar, while removing artificial flavors and high-fructose corn syrup and using only non-GMO ingredients — attributes that are valued among today’s shoppers who are closely watching what they eat and drink.

Capitalizing on existing brand awareness also was the impetus for Jumex, a 64-year-old Mexico-based beverage manufacturer, to acquire the license for the juice and smoothie brand Odwalla discontinued by Coca-Cola in 2020. Adding Odwalla to its portfolio allowed Jumex to capitalize on synergies with its existing offerings and further expand its U.S. presence. 

Odwalla’s history dates back to the 1980s when a group of jazz players from Chicago launched a business selling orange juice out of a Volkswagen van to fund their musical ambitions. The brand’s product lineup grew to include other juices, waters, smoothies and energy bars.

Jumex was surprised to learn that many consumers thought Odwalla was still on shelves. This provided an opportunity to tap into that brand awareness to remind shoppers of its existence. 

“This is a brand that built the RTD juice and smoothie category,” Ariela Nerubay, chief marketing officer with Jumex USA, “and so we’re again tapping into every aspect of that legacy in order to reintroduce it.” 

To increase its chances of success, Jumex is leaning into Odwalla’s nostalgic roots while modernizing the brand to resonate with consumers. The beverage maker is tweaking the ingredients list by removing vitamins that previously were added to some Odwalla products; instead touting its simple, transparent list of real fruit and natural ingredients.

Jumex eventually wants to bring the brand “back to its former glory days,” said Carlos Madrazo, country manager with Jumex USA. 

For now, Jumex isn’t rushing to rebuild Odwalla’s entire portfolio and instead prioritizing core products such as Strawberry-Banana smoothies and Green Juice, a blend of pineapple, apple and cactus.

“The U.S. is the most competitive market in the world. Obviously, it’s going to be a challenge,” Madrazo said. “We’re taking this one step at a time. I don’t want to minimize the complexity of relaunching it.”

The calculus of reviving dead brands

For some executives, relaunching brands has become a full-time business. 

Leaf Brands CEO Ellia Kassoff has reintroduced several sweets to the market, including candies Astro Pops, Wacky Wafers and Tart n’ Tinys along with cookie brand Hydrox. The executive said it’s a time-consuming and expensive process to bring once-beloved products back from the dead. 

With many of the items off the market for years, and often decades, Kassoff sometimes has to track down executives and founders to help recreate the product’s formula and find a manufacturing facility with the technology to make it. 

Leaf, for example, is only now close to relaunching Bonkers, a rectangular-shaped candies with a fruity outside and a flavorful fruity center filling produced by Nabisco in the 1980s and 1990s, which it acquired the trademark to seven years ago.

The company also has revived Hydrox, which differentiates itself from Mondelēz International’s $4 billion-plus Oreo brand with a crispier cookie, less sweet flavor and darker chocolate. Hydrox also is made with the original formulation from the 1960s and 1970s — before high fructose corn syrup and artificial flavors and colors surged in popularity — while including real cane sugar and vanilla. 

When deciding whether to bring back a discontinued brand, Kassoff said he carefully balances recreating the original offering so it appeals to nostalgic diehards while finding ways to enhance it to appeal to new customers.

“If the consumer is excited and buys it but says ‘What the hell is this? This is not what I remember.’ You don’t have a customer anymore,” Kassoff said. “So it’s critical that you bring stuff back exactly the way people remember it.”

Some companies relaunching discontinued brands, however, are less concerned about the original formula to ensure that they’re speaking to the latest consumer trends. 

Jolt, a mainstay on shelves in the late 1980s and 1990s with twice the caffeine as other colas, is back this year after Redcon1, a Florida supplement and energy drink company, acquired the license.

This time Jolt is being positioned as an energy drink. Redcon1 has more than doubled the cola’s prior caffeine total and switched to sucralose as the sweetener instead of sugar. 

Jolt has focus-enhancing nootropics, B vitamins, and a non-stimulant metabolism booster — appealing to consumers seeking functional benefits from their energy drinks. There are more changes, such as can size, which is increasing from 12 ounces to 16 ounces. 

Jolt’s founder filed for bankruptcy in 2009 as market competition and a costly canning contract weighed on the brand. It briefly returned to the market in 2017, but a lack of distribution prevented Jolt from gaining momentum and it disappeared again. 

Redcon1 is optimistic nostalgia for the beverage will draw in consumers who grew up with the brand while also attracting Gen Z shoppers, a demographic that is a big user of energy drinks and has shown a penchant for embracing the mantra that “what’s old is new.” The fast-growing energy drink market is valued at $23 billion.

“To the older audience like us, we remember when we weren’t allowed to have it,” said Ryan Monahan, chief marketing officer at Redcon1. “So that has that nostalgia play. But then just looking at industry trends, some of the old stuff is making a comeback with the Gen Z. They’re kind of reimagining these older types of experiences or brands or products in a new way.”

Kostyo, who consults for the food and beverage industry on consumer trends, acknowledged brands returning to the market after years away face an uphill battle.

The product was discontinued for some reason — a lack of innovation, the emergence of competitors, or the disappearance of a once prominent fad, for example — so inevitably some degree of change is likely going to be required to fix the problem or modernize the product. 

“It’s really tricky,” Kostyo said. “The number of brands that we’ve seen successfully come back is so low.”

Still, with product failures continuing, future generations will itch to see some of their favorite brands growing up make a return to the market, said Dan McCarthy, an associate professor of marketing at the University of Maryland. This means today’s hot products could turn into tomorrow’s reboot several years from now.

“Brand reboots are here to stay,” McCarthy said. “Brands are dying every year. There’s certainly ample supply ... to be able to revive.”

The fast pace of deal-making in the food and beverage space has recently put the spotlight on Brynwood Partners.

The private equity firm has been one of the most active buyers and sellers in the food and beverage space this year. It divested SunnyD maker Harvest Hill Beverage Company for roughly $1.5 billion in May and followed that up one month later with the acquisition of Chef Boyardee from Conagra Brands for $600 million. Henk Hartong, Brynwood’s CEO, told Food Dive more deals could be on the horizon.

Throughout its 41-year history, the firm has carved out a prominent niche in food and beverages with a portfolio that prioritizes popular brands including Pillsbury, Hungry Jack, Martha White and Funfetti. 

Brynwood’s strategy is to identify brands that are no longer priorities at large food manufacturers, then find ways to rejuvenate sales through new marketing and product innovations. 

Sales of Sunny D, for example, doubled in the nine years Brynwood owned the brand as it expanded availability of small format sizes to capture on-the-go consumers. It also extended the drink into new categories, such as alcohol through the launch of an RTD cocktail.

Hartong recently sat down with Food Dive to discuss what Brynwood looks for in an acquisition target, its approach to reinvigorating purchased brands and the current market for dealmaking. 

This interview has been edited for brevity and clarity.

 

FOOD DIVE: What attracted you to Chef Boyardee and how does that acquisition reflect Brynwood Partners’ broader strategy?

Henk Hartong: At the foundation of every new opportunity that we look at, we're trying to identify whether they're businesses or brands, and whether they're standalone or corporate carve-out opportunities that allow us to combine our operating skills with our investing skills to accelerate performance.

This strategy tends to lend itself well to non-strategic, non-core brands of large corporations. Large companies can't do everything, and so they have to pick and choose their places.

Oftentimes, brands with a tremendous amount of equity and potential are deeper in the larger organization for what can be very good strategic reasons. But that creates an opportunity for someone like us to apply those fixes to these unique situations and bring life, innovation and energy to a business that was otherwise waiting in line for those attentive details.

What do you look for when it comes to a brand that you might be interested in acquiring?

We sell to the masses, not to the classes. And one of the benefits of buying some of these mainstream products is that many people in the investment community look at these brands or businesses as things that wouldn't fit their personal lifestyle, but for most Americans, they're critically important. And I think that gives us an advantage.

In the case of Sunny D, people said, ‘Henk, what are you doing?’ That was 12 years ago. I obviously didn't believe in what those people thought. I thought we could take a brand with incredible equity, a mainstream American product, and reinvigorate it with all the things that it wasn't getting.

At the time we acquired it, if you ask somebody in 2015, “Hey, I just bought Sunny D,” your general answer was, “I used to drink Sunny D. I used to drink that when I was a kid, or I used to drink that so many years ago.” Our whole focus was, how do we get that response to not start with, “I used to.” Now, today, if you ask someone, they’re like “Oh, that brand is so cool. All that new product is amazing.” We got rid of “I used to.”

If you talk to someone about Chef Boyardee right now, your first response is, typically, “I used to eat that as a kid. I used to eat that when I was in college.” Whatever specific correlation somebody has with the brand is a reflection on a past experience. So you have all that equity nostalgia that's kind of boxed up in a non-core operating strategy applied by the previous owners. It lends itself well to what we think we can do with the business.

Then part of the process of doing that is that we have been focusing on how do we create different opportunities for lapsed consumers to experience [Chef Boyardee] in different parts of the store with logical adjacencies to the traditional canned pasta and microwavable cups, which is the lion's share of the business as it exists today.

Embracing and strengthening those performances are critically important to our success. A big path for our growth will be taking the equity of Chef Boyardee and creating it in different formats that allows us to reintroduce the brand to lapsed consumers, so that the next time we ask them, in X number of years, they talk about, “Oh, I love your new product,” and the “I used to eat it” is no longer the way they reflect on their experience with the brand.

 

Even before Brynwood closes an acquisition, you are already outlining what you will do with the brand once it’s acquired. What was the approach with Chef Boyardee? 

One thing you'll universally hear from our customers is how important Chef Boyardee is to them because it provides a mainstay meal at a very affordable price with a quality product that's hearty and nutritious and filling. That plays a critical role at a time when a lot of families are having a hard time finding ways to make ends meet. 

So we knew it was important to our customers. What we're now working on is how do we provide them with innovation.

We tend to look at the areas where the market has been going, whether it's shelf stable trays or dry box meals or other areas that are massive categories where the equity of Chef could play, but it hasn't gone because [Conagra] wasn't going to give the resources to the marketing team to go explore those opportunities. It was going to focus on its core offerings and leave it at that. 

We developed some strategies around where we think we can take the brand, have done some prototypes and started doing some R&D work well before we close.

 

What opportunities are you seeing in the marketplace? Are there more potential acquisitions on the table as consumers cut back on spending and businesses look to improve their operations? 

There are two things that drive corporate divestitures. First and most, regardless of the economic cycle that you're in, is a change in the strategy, or a change in the corner office. It's possible somebody new comes in and says, “We need to take a look at this. We want to refine the strategy and the following businesses aren't as important today as they used to be a few years ago.”’ And that oftentimes leads to portfolio reshaping.

The other circumstance is when you get into a tough market for sales and for market share, and we're in the middle of that right now. So if you just look at the public companies' last couple of quarterly earnings reports, you're having a lot of people putting up either negative comps or lower-than-expected growth numbers. And when you're in the public markets and you're not achieving growth, you tend to look to find a way to get it back.

One of the ways to get it back is to accelerate growth on your core businesses, and another way is to divest things that are not growing or declining faster than other things in your portfolio. That tends to create opportunities as well. In this market where growth is hard, you're going to see a lot of folks looking to shed non-growth assets.

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.