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Welcome to Dealboard. In this weekly feature, The Current is providing a look at the mergers, acquisitions and venture capital deals making waves in ecommerce, CPG and retail.
This week, Post brings on a pack of pet food brands, and recognizable brands Keds and Tofurky have new owners. Meanwhile, growing brands making upcycled fruit snacks and hydration beverages raised new funds.
The Ugly Company, an upcycled fruit snacks brand, raised $9 million in a Series A funding round. Sun Valley Packing and Value Creation Strategies led the financing, with participation from musician Justin Timberlake and Valley Ag Capital Holdings. The Ugly Company takes fruit from farmers that is deemed unfit for shelves and would otherwise go to waste, and turns it into dried fruit snacks. Along with its DTC site, the company has a presence in Sprouts and Whole Foods. It is also expanding to West Coast grocery stores owned by Kroger later this year.
Roar Organic, a beverage brand, raised $6 million in new funding, according to CityBiz. The brand will use the funds to grow its product line, expand operations and extend business reach. Led by Bill Lange, Roar makes a line of hydration beverages with vitamins, antioxidants and electrolytes. The brand has online distribution through Whole Foods, and a presence in grocers including Whole Foods Markets, Kroger, Sprouts and Wegmans.
Post Holdings is buying a series of pet food brands fromThe J.M. Smucker Co.for $1.2 billion. Post will now own Rachael Ray, Nutrish, 9Lives, Kibbles 'n Bits, Nature's Recipe, Gravy Train and Smucker’s private label pet food business. These brands are expected to generate $1.5 billion in revenue in this fiscale year. With the deal, a group of employees in Smucker’s pet food division will join Post, and that company will assume control of production facilities for the brands in Pennsylvania and Kansas. Smucker CEO Mark Smucker said the move is part of the company's "strategy to prioritize investments and resources in the areas of our business that offer the strongest growth and profit potential."
Keds was sold to DSW owner Designer Brands, Inc. by Wolverine Worldwide. The deal for the iconic footwear brand comes as Wolverine is aiming to reduce complexity. Along with the sale, Wolverine is also granting the exclusive U.S. and Canadian license for Hush Puppies footwear to DBI. Combined, these deals are expected to generate $90 million.
eBayacquired 3PM Shield, a provider of marketplace compliance technology. In bringing aboard 3PM Shield’s AI-based software, eBay will aim to strengthen protection against the sale of counterfeit items, unsafe products and illegal goods on its ecommerce marketplace. The companies previously worked together as partners. Terms of the deal were not disclosed.
Morinaga Nutritional Foods, the U.S.-based manufacturer of Mori-Nu Silken Tofu, acquired plant-based protein brands Tofurky and Moocho. With the deal, Morinaga plans to add operational capacity at Tofurky’s production facility in Hood River, Oregon. That facility will join Morinaga’s existing tofu manufacturing plants in Torrance, California, and Tualatin, Oregon. Terms were not disclosed.Firefly Buys, an ecommerce accelerator, was acquired by reCommerce, a technology-enabled strategic partner to brands selling on Amazon. Founded in 2006 by Ryan Flanegan, Ryan Kuelpman, and Jonathan Katz, Firefly Buys provides brands with supply chain management, listing optimization and a formula to increase product availability and sales on Amazon.
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Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.