With a change in consumer preferences, there is a huge demand for innovative snack products with unique flavors. Food manufacturer The J. M. Smucker Company (SJM) is also keen on expanding its snacks portfolio and has recently completed the acquisition of Seattle, WA-based Sahale Snacks, Inc. for an undisclosed amount from a private investment firm called Palladium Equity Partners, LLC.
Sahale is a privately-held company, which manufactures and markets premium, branded nut and fruit snacks. Its products are primarily sold in the United States under the Sahale Snacks brand.
Per the deal signed in Aug 2014, Smucker has acquired a leased facility in Seattle and approximately 150 employees of Sahale. The acquisition is expected to enhance Smucker’s portfolio with innovative and in vogue snacking products.
The deal is a strategic fit for Smucker as Sahale’s premium lifestyle snacks brand perfectly complements its products like fruit spreads, retail packaged coffee, peanut butter, shortening and oils, ice cream toppings and sweetened condensed milk. However, the transaction will benefit the company’s earnings only after fiscal 2015.
Other snacking companies like The Frito Lay division of PepsiCo Inc. (PEP), Snyder's-Lance, Inc. (LNCE) and Mondelez International, Inc. (MDLZ) have been focusing on introducing different snacking options for its customers, which help maintain a steady energy level throughout the day.
Besides the snacks business, Smucker has also tried its hand at specialty and organic foods. Demand for healthy, nutritious and natural foods has grown in recent years as people are more concerned about obesity and other health problems. In Aug 2013, the company acquired CA-based Enray Inc., which is a privately-held company that manufactures and sells organic, gluten-free ancient grain products.
The American Heart Association estimates that currently about one-third of U.S. adults are obese. If the current obesity growth trend continues, total healthcare costs attributable to obesity could account for as high as 16% to 18% of U.S. health expenditure. As a result, Americans are gradually spending more on higher-priced organic and specialty food products despite overall decline in consumer spending.
Smucker holds a Zacks Rank #3 (Hold).
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