Global Food-Giant Buyouts of Top Organic Brands
The organic foods business has gone so far beyond wheat sprouts and fresh pressed juices that Whole Foods Market, WFM,is close to breaking into the top half of the Fortune 500 rankings of America’s largest companies.
Sales of organic food and beverages grew 9.6 percent in 2011 to $29.22 billion, according to the Organic Trade Association’s Organic Industry Survey.
The organic category now accounts for 4.2 percent of all U.S. food sales, with organic products available in about three of four food stores in the nation, according to the Department of Agriculture.
Consumer demand for organically produced goods has shown double-digit growth for well over a decade, according to the USDA, which now has an entire section devoted to the subjecton its website.
Investors who might want to ride the organic wave have a few pure-play options.
Along with Whole Foods there are two other food-market chains, Fresh Market,FM,and Natural Grocers by Vitamin Cottage,NGVC,which went public in July, as well as the food processor Hain Celestial,HAIN,which owns dozens of popular brands.
Traditional supermarket chains, such as Kroger,KRand Safeway,WY,as well as warehouse players such as Costco Wholesale,COST,have jumped into the business, introducing their own organic bands.
Major food and beverage companies have done the same but have also taken an acquisitive approach, buying many of the famous, trend-setting brands started by entrepreneurs as far back as the 1970s.
Here is a list of organic brands and/or companies that global food giants have acquired, directly or through a subsidiary. (Some acquisitions involved companies that had made acquisitions of their own or were previously purchased by another firm.)
Not all of the top players, however, have entered the market; others have barely touched it; still others are not publicly traded. Thus, we're highlighting the companies with the most prolific, competitive and strategic activity that might be of interest to investors.
(Global ranking and sales data are from Food Engineering Magazine.)
Published Oct. 8, 2012
Nestlé NES-FIRanking: 1
Sales: $83.05 billion (year ending Dec. 2011)
Acquisitions: Mediterranean Foods*
Sweet Leaf Tea
Pria Grain Essential
The Swiss-based giant is a master at acquisitions, evident in its wide variety of products that are household names around the world: chocolate, coffee, water, cereals, yogurt, infant formula, dog food and, of course, organics. It bought PowerBar in 2000, Pria in 2006, Mediterranean in 2008 and Sweet Leaf in 2011.
(* via Israeli subsidiary Osem Group)
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PepsiCo PEPRanking: 2
Sales: $65.88 billion (year ending Dec. 2011)
Acquisitions: IZZE Beverage
Stacy’s Pita Chips
PepsiCo bought Stacy’s in 2005, and both Naked and IZZE in 2006.
It also acquired a majority stake in a Russian juice and diary company, as part of its strategyof building a $30- billion nutrition business by 2020.
But the company famous for soft drinks and chips has also established a presence in the organic area through more than simple acquisition. It offers organic versions of best-selling, home-grown brands, such as Tostitos and Tropicana.
Sales: $54.36 billion (year ending Dec. 2011)
Acquisitions: Boca Foods
Back to Nature
Kraft acquired Boca in 2000 and Back to Nature in 2003, moves that preceded a 2007 growth strategy, which included expanding its organic line of foods. Kraft recently agreed to sell a majority stake in Back to Nature to private equity firm Brynwood Partners, a move related to its split in October.
(*The rankings were determined before Kraft's : Kraft Foods Group, KRFT, and Mondeléz International, MDLZ, began trading separately Oct. 2.)
The Coca-Cola Company
The Coca-Cola Company KO
Sales: $46.54 billion (year ending Dec. 2011)
Acquisitions: Honest Tea
Mad River Traders
Coca-Cola bought the juice company Odwalla in 2000 and Mad River Traders — a natural soda, tea and juice maker — in 2001, as part of a move to expand its noncarbonated drinks business. The Atlanta-based icon swallowed Honest Tea in two gulps — a 40 percent stake in 2008 and outright control in 2011.
Tyson Foods TSN
Sales: $32.24 billion (year ending Sept. 2011)
Acquisition: Nature’s Farm Organic
With sales of organic chicken far outpacing that of other meats over the years, it is no surprise Tyson bought Nature’s Farm Organic in 2004. In 2007, the company began its “100% All Natural™, Raised Without Antibiotics” chicken initiative.
Danone BN-FRRanking: 13
Sales: $ 26.85 billion (year ending Dec. 2011)
Acquisition: Stonyfield Farm/Brown Cow
When the French water, biscuit and yogurt giant purchased a 40 percent stake in Stonyfield Farm in 2001, it was the fastest-selling organic yogurt maker in the U.S. Stonyfield bought Brown Cow in 2003. Danone now owns about 85 percent of Stonyfield, which is run independently. Co-founder Gary Hirshberg is still chairman.
General Mills GIS
Sales: $14.88 billion (year ending May 2011)
Acquisitions: Foods Should Taste Good
Mountain High Yoghurt
General Mills added snack maker Foods Should Taste Good to its Small Planet Foods division in February 2012. Prior to that, it acquired Mountain High Yoghurt (2010) and Humm Foods, known for its Larabar brands (2008). In 1999, GIS purchased Small Planet Foods, which owned the Cascadian Farm and Muir Glen brands of canned and frozen foods, juices and sauces.
Kellogg Company K
Sales: $ 13.19 billion (year ending Dec. 11)
Wholesome & Hearty
Kellogg has been very active, snapping up some well-known names: Morningstar (1999), Natural Touch (1999) and Kashi (2000) — which remains independently operated — and Wholesome & Hearty (2007), known for its Gardenburger patties and Bear Naked granola brands.
Dean Foods DF
Sales. $ 13.05 billion (year ending Dec. 11)
Acquisitions: Alta Dena
The dairy giant owns dozens of brand names, including those in this organic group. Its WhiteWave division controls the Horizon Organic (milk) and Silk (soy) brands. Dean bought Alta Dena in 1999.
ConAgra Foods CAGRanking: 31
Sales: $12.30 billion (year ending May 2011)
Acquisitions: Lightlife Foods
ConAgra may not have the same corporate name recognition of the others, but its products — Chef Boyardee, Wesson, Hunts, for example — are household names. It also owns the Healthy Choice frozen meal line.
Its entry into organic foods began in 2000 with Lightlife, which makes veggie sausages, hot dogs, burgers, bacon and other vegetable-based “meats.” ConAgra acquired Alexia Foods, which makes frozen appetizers and side dishes, in 2007. It also has organic versions of some core products.