Planters is America’s top-selling brand in the nuts, seeds and trail mixes category, according to Euromonitor. The brand posted net sales of almost $1bn last year, however, its market share dropped to 16.2% from 22.9% in 2015.
News of the sale comes as Kraft Heinz reported fourth-quarter revenue that beat analysts’ estimate. However, the decision to offload the Planters portfolio – which includes nuts, trail mix, the Nut-rition and Corn Nuts branded products, along with Cheez Balls and Cheez Curls – is part of the company’s cost-cutting plan.
CEO Miguel Patricio said the sale will enable the company to “sharpen our focus on areas with greater growth prospects and competitive advantage for our powerhouse brands.”
Eye on the nuts
The transaction – which is expected to close in the second quarter – has not come soon enough for the Skippy peanut butter and Spam maker. Hormel chairman, president and CEO Jim Snee said the company has had its eye on Planters for years.
“We identified the Planters brand in our 2016 strategic planning process as a brand that would fit well into our growing and evolving portfolio. However, it wasn’t until early 2020 that we engaged with Kraft-Heinz on this process.
“There is nothing revolutionary here. There is no new strategy of the day. The acquisition of Planters is simply a continuation of our strategic evolution,” he said.
He did, however, hint that the transaction – the largest in Hormel’s history – could pave the way for more acquisitions in the snacking space.
“We believe that Planters could act as a similar catalyst into other areas in the snacking space.”
While Kraft Heinz also cited competition from the private label corner as a reason for divesting the brand, Snee said Hormel plans on differentiating Planter products by appealing to consumers’ preference for convenience. Unlike bulk nuts in a grocery store, Planters products don’t need to be portioned out and weighed.
“The ‘grab-and-go’ element for consumers continues to gain traction,” said Snee.
The Austin, Minnesota-headquartered conglomerate added the transaction provides a tax benefit of about $560m.