<p><img src="https://static1.businessinsider.com/image/5ff4ea01d184b30018aad321-727/Hu chocolate bars.jpg" border="0" alt="Hu chocolate bars" data-mce-source="Hu"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>The first major food deal of 2021 involves Mondelez buying an upstart paleo chocolate brand. And if food companies' results in 2020 are any indication, they have plenty more cash to spend on acquisitions in 2021.</p><p>The maker of Oreo cookies said Tuesday that it would acquire Hu, turning its minority stake in the company into full ownership. The Wall Street Journal, which initially reported the deal, said Mondelez <a href="https://www.wsj.com/articles/mondelez-nears-deal-to-buy-rest-of-paleo-chocolate-bar-maker-hu-11609793950">valued</a> Hu at $340 million.</p><p>Even as many food companies are reporting their best sales in years and piling up cash as consumers eat more at home, using that cash to make acquisitions has become trickier than it was before COVID-19.</p><p>As products like mac n' cheese, cold cuts, and other processed and shelf-stable foods fly off the shelves, experts say companies are likely to be cautious about taking on new operations through acquisitions. Though a few major food deals closed in 2020, such as <a href="https://markets.businessinsider.com/news/stocks/mondel%C4%93z-international-completes-acquisition-of-give-go-1029056342">Mondelez's $1.2 billion purchase of Give and Go</a>, which makes frozen baked goods that can be thawed before retailers and restaurants sell them, there have been fewer acquisitions of brands by big food companies since coronavirus shook consumer habits and financial markets starting last spring.</p><p>With food companies striking fewer deals, many are accumulating cash. Analysts say that, until the pandemic ends, many deals are more likely to look like Mars's $5 billion acquisition of snack bar maker Kind. The privately held food giant announced its deal last November.</p><p>Brands that have annual sales in the low millions were frequent acquisition targets before the pandemic, said Bob Goldin, partner and co-founder at Pentallect, a consultancy that advises food companies. Many companies bought those small brands, such as cookie company Tate's Bake Shop, which Mondelez purchased for $500 million in 2018, planning to introduce them to new grocery store shelves or at new restaurant locations over time.</p><p>But with many retailers and CPGs cutting back on their product lineups in light of new buying habits, helping a young brand expand has become a less appealing prospect. "If you're going to pay all that money, you might as well not get a fixer-upper," Goldin said in an interview with Business Insider.</p><p>Companies like Kind, while more expensive to purchase, are better bets in the current environment, he said, since they are already widely distributed and known to consumers. He added that brands with between $50 million to $250 million in annual sales represent a "sweet spot" that big food companies could eye for deals.</p><p><strong>Here are five mature food companies that larger players like General Mills, Kellogg and others could be considering for a potential acquisition, according to Goldin:</strong></p><h3>Bob's Red Mill</h3><img src="https://static2.businessinsider.com/image/5fbcf8ef50e71a001155702d-400-300/bobs-red-mill.jpg" alt="" /><p><p>Baking has taken off during the pandemic as people spend more time at home. Buying Bob's Red Mill would be a bet that the trend will continue even after a vaccine is widely distributed, Goldin said.</p><p>The Oregon-based company, founded by Bob and Charlee Moore in 1978, sells baking ingredients from gluten-free flour to brownie mixes and distributes its products through national retailers such as Walmart and Target.</p><p>While the company is private, it <a href="https://www.cnn.com/2020/02/14/success/bobs-red-mill-founder-profit-sharing/index.html">confirmed</a> that its 2018 sales totaled more than $50 million. </p></p><br/><br/><h3>Clif Bar</h3><img src="https://static4.businessinsider.com/image/5fbcf58450e71a001155702a-400-300/clif-bar.jpg" alt="" /><p><p>Snack bars have been a focus for big food companies recently. In addition to Mars's purchase, other recent acquisitions in the space include Kellogg's 2018 deal for RXBar and Mondelez's 2019 acquisition of Perfect Bar.</p><p>Like Kind, Clif focuses on healthy ingredients, and they already sell their products in a range of places, from grocery stores to coffee shops, Goldin said. "They are online, and they are in multiple channels," he said. "It's established."</p><p>But convincing founders Gary Erickson and Kit Crawford to sell could be challenging: Erickson <a href="https://www.sfchronicle.com/business/article/Despite-big-growth-in-snack-sales-Clif-Bar-not-11107863.php">told</a> The San Francisco Chronicle in 2017 that he had no intention of selling the business, instead preferring to keep it within his family. </p></p><br/><br/><h3>Utz Brands</h3><img src="https://static6.businessinsider.com/image/5fbd19ec32f2170011f70d87-400-300/utz-brands.jpg" alt="" /><p><p>Companies like Mondelez and Kraft Heinz have reported some of their best snack sales in years during the pandemic, and PepsiCo's Frito-Lay <a href="https://www.businessinsider.com/food-makers-beef-up-manufacturing-as-covid-purchases-surge-again-2020-11">estimates</a> that a majority of consumers are snacking more as a result of staying indoors more.</p><p>That makes Utz, which makes pretzels, potato chips, and popcorn, a potentially attractive target for a larger player, Goldin said.</p><p>Utz went public through special purpose acquisition company Collier Creek Holdings in August and had annual revenue of $768 million in 2019, according to filings. The Pennsylvania-based company's current priorities include expanding its distribution nationally, including to states like Florida and Texas.</p></p><br/><br/><h3>Noosa</h3><img src="https://static1.businessinsider.com/image/5fbcf77850e71a001155702c-400-300/noosa.jpg" alt="" /><p><p>Yogurt is an attractive category for major food companies, Goldin said. Noosa, which markets the natural fruit purees and honey in its products, has posted particularly strong growth with its Australian-style yogurt, he added.</p><p>While private, Noosa's sales tripled between 2014 and 2018, the company has said. The brand is currently part of Sovo Brands, a company that invests in food labels that have the potential to grow.</p><p>Noosa got its start in 2009 when it was founded by Australian Koel Thomae and Colorado dairy farmer Robert Graves.</p></p><br/><br/><h3>Monterey Gourmet Foods</h3><img src="https://static2.businessinsider.com/image/5fbd2a0950e71a00115570f0-400-300/monterey-gourmet-foods.jpg" alt="" /><p><p>California-based Monterey Gourmet Foods already sells its packaged pasta dishes, stir fry kits, and other heat-and-eat meals through Costco and Walmart's Sam's Club. Refrigerated and <a href="https://www.businessinsider.com/why-walmart-is-adding-frozen-food-even-beyond-covid-19-2020-9">frozen meals</a> have been among the most popular options with consumers during the pandemic.</p><p>Goldin says that having an established distribution network through club retailers like Costco and Sam's would be appealing for large CPG or food companies, many of which rely on traditional grocery and foodservice clients for a large majority of their sales. </p><p>Sales at restaurants have collapsed, and with a recovery unlikely to take hold soon, buying brands that require limited preparation and take companies deeper into retailers like wholesale clubs makes sense, he added. "I think we've learned how important channel diversification is," Goldin said.</p></p><br/><br/>
Click here to read full news..
