PepsiCo has reached a definitive agreement with Haoxiangni Health Food Co. to acquire Hangzhou Haomusi Food Co. – known as Be & Cheery – for $705m.
The snack giant – which is on a mission to become the Asian nation’s leading consumer-centric food and beverage company – has been operating in China for nearly 40 years, experiencing ‘double-digit’ revenue growth last year.
Hangzhou-based Be & Cheery is one of the country’s top three local snack food companies – the others being Three Squirrels and Bestore – posting a revenue of approximately RMB 5bn ($711.1m) in 2019. It predominantly sells its ‘better-for-you’ offerings of nuts, dried fruits, meat snacks, baked goods and confectionery through the country’s major e-commerce platforms.
Be & Cheery’s first offline store was opened in 2003 and it set up its operations on Taobao.com in 2010. In 2016, Haoxiangni Health Food Co acquired Be & Cheery for 960 million yuan ($136.6m).
According to PepsiCo, Be & Cheery’s strength lies in its ability to quickly adjust its product portfolio to respond to changing consumer trends – an essential criteria for the fast-paced Chinese scene.
“Be & Cheery is highly complementary to our existing China business with its broad product portfolio, asset light model, and focus on e-commerce,” said Ram Krishnan, CEO of PepsiCo China.
“As we look to accelerate growth in key markets around the world and further grow ‘In China, For China, With China’, Be & Cheery adds direct-to-consumer capability, positioning us to capitalise on continued growth in e-commerce, and a local brand that is able to stretch across a broad portfolio of products, through both online and offline channels.
“We also expect to leverage Be & Cheery's innovation and consumer insights capabilities to drive innovation in other key PepsiCo growth markets.”
Haoqun Qiu, Be & Cheery’s chairman, is equally confident of the win-win acquisition.
“We believe PepsiCo's strong branding and route-to-market capabilities as well as global supply chain network will help us deliver and expand on that mission.
“PepsiCo and Be & Cheery are jointly confident in the prospects for China's snacks industry and share a commitment to invest in consumer-led and digitalised capabilities,” he said.
PepsiCo began working on the acquisition before the region was gripped by the coronavirus outbreak late last year. Finalising the deal signals a confidence to make a long-term commitment despite the uncertain short-term play.
The snack giant closed its plant in Wuhan earlier this year – one of six manufacturing facilities in the country – but this is expected to resume operations shortly.
Last year, PepsiCo acquired a 26% stake in China-based Natural Food International, which makes a range of products from grains, nuts and beans.
The transaction is subject to a Haoxiangni shareholder vote, certain regulatory approvals and other customary conditions.