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Global Food-Giant Buyouts of Top Organic Brands

CNBC.com

Global Food-Giant Buyouts of Top Organic Brands

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The organic foods business has gone so far beyond wheat sprouts and fresh pressed juices that the top company in the sector, is close to breaking into the top half of the Fortune 500 rankings of America’s largest companies.
Photo: Kate Wittkamp | Digital Vision | Getty Images

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.)

By CNBC.com

Published Oct. 8, 2012

Nestlé

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Nestlé NESR-FFRanking: 1Sales: $83.05 billion (year ending Dec. 2011)Acquisition(s): Mediterranean Foods*                    Sweet Leaf Tea                    PowerBar                    Pria Grain EssentialThe 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.
Photo: Gianluca Colla | Bloomberg | Getty Images

Nestlé NES-FIRanking: 1
Sales: $83.05 billion (year ending Dec. 2011)
Acquisitions:  Mediterranean Foods*
                    Sweet Leaf Tea
                    PowerBar
                    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)

PepsiCo

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PepsiCo Ranking: 2Sales: $65.88 bill (year ending Dec. 2011)Acquisition(s): IZZE Beverage                    Naked Juice                    Stacy’s Pita ChipsPepsiCo 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 of building a $30-billion nutrition business by 2020. But the company famous for chips and soft drinks 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.
Photo: Jin Lee | Bloomberg | Getty Images

PepsiCo PEPRanking: 2
Sales: $65.88 billion (year ending Dec. 2011)
Acquisitions: IZZE Beverage
                   Naked Juice
                   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.

Kraft

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Kraft FoodsRanking: 3*Sales: $54.36 billion (year ending Dec. 2011)Acquisitions: Boca Foods                  Back to NatureKraft 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
Photo: Daniel Acker | Bloomberg | Getty Images

Kraft *
Ranking: 3*
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

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The Coca-Cola Company Ranking: 4Sales: $46.54 billion (year ending Dec. 2011)Acquisitions: Honest Tea                  Mad River Traders                  Odwalla
Photo: Evy Mages | The Washington Post | Getty Images

The Coca-Cola Company KO
Ranking: 4
Sales: $46.54 billion (year ending Dec. 2011)
Acquisitions: Honest Tea
                  Mad River Traders
                  Odwalla

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

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Tyson Foods Ranking: 8Sales: $32.24 billion (year ending Sept. 2011)Acquisition: Nature’s Farm OrganicWith sales of organic chicken far outpacing that of other meats, 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.
Photo: David Paul Morris | Bloomberg | Getty Images

Tyson Foods TSN
Ranking: 8
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

Groupe Danone Products.
Balint Porneczi | Bloomberg | Getty Images

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

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General Mills Ranking: 21Sales: $14.88 billion (year ending May 2011)Acquisition(s): Foods Should Taste Good                    Larabar                    Mountain High Yoghurt                    Cascadian Farm                    Muir Glen
Photo: Scott Eells | Bloomberg | Getty Images

General Mills GIS
Ranking: 21
Sales: $14.88 billion (year ending May 2011)
Acquisitions: Foods Should Taste Good
                  Larabar
                  Mountain High Yoghurt
                  Cascadian Farm
                  Muir Glen

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

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Kellogg Ranking: 24Sales: $ 13.19 billion (year ending Dec. 11)Acquisition(s): Kashi*                    Morningstar Farms                    Natural Touch                    Wholesome & Hearty
Photo: Daniel Acker | Bloomberg | Getty Images

Kellogg Company K
Ranking: 24
Sales: $ 13.19 billion (year ending Dec. 11)
Acquisitions: Kashi*
                  Morningstar Farms
                  Natural Touch
                  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

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Dean Foods Ranking: 28Sales. $ 13.05 billion (year ending Dec. 11)Acquisition(s): Alta Dena                    Horizon Organic                    Silk
Photo: Rich Clement | Bloomberg | Getty Images

Dean Foods DF
Ranking: 28
Sales. $ 13.05 billion (year ending Dec. 11)
Acquisitions: Alta Dena
                  Horizon Organic
                  Silk

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

ConAgra Foods products
Daniel Acker | Bloomberg | Getty Images

ConAgra Foods CAGRanking: 31
Sales: $12.30 billion (year ending May 2011)
Acquisitions: Lightlife Foods
                    Alexia 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.