Consumers continue their seismic shift towards healthier foods with cleaner labels
In September of this year, Nestle USA bought Sweet Earth and the CEO said this is in line with modern health trends and is one of their strategic priorities in their portfolio of brands.
Amplify Snack Brands
In the same month, Conagra Brands bought Angie’s Boomchickapop and the CEO said this is an important step in our plan to modernize our portfolio.
Now, Hershey buys Amplify Snack Brands to “capture more snacking occasions” and says this deal aids in their “journey to becoming an innovative snacking powerhouse.
The major food companies in the United States are under siege. Their traditional less healthy brands are losing market share to younger more innovative and resourceful brands. Consumers continue their seismic shift towards healthier foods with cleaner labels where they understand the ingredients.
The larger players struggle to focus their development budgets and have little to show from their internal research pipelines other than a keen awareness of what the consumer wants.
And what the consumer wants is being made by others.Therefore, these long-time household names are diverting their R&D budgets to acquisitions.
Those same companies are fostering venture fund arms to do earlier stage research than ever before.
Honest & natural products
They have concluded they have no choice but to acquire what they themselves cannot develop: honest and natural products that are good for the body and mind and generate the kind of brand loyalty that they used to thrive upon with their legacy brands.
The rules have changed forever. The consumer will continue to drive this change as the younger generations mature and increase their buying power and their persuasive attitudes on social media.
What people want from their meals, from their hydration and from their snacking will never be the way they were.
Private equity and venture funds are generating significant capital flow to emerging brands with the potential to one day be the company acquired by Hershey or Conagra or Nestle.
This capital is being invested in further innovation and marketing to help these brands spread their message and their products to the consumer masses via traditional and, more and more, non-traditional retail channels.
The food and beverage industry in the United States is in the early to middle innings of an evolution that began more than 20 years ago.
The players must evolve with it or become extinct.'
Wank is an accounting and advisory partner at Anchin and a member of the Firm’s Executive Committee. He leads the Firm’s Food and Beverage Industry Practice, providing accounting, business, and tax planning services to privately held companies and investors throughout the industry.
