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Please see below for a listing of what the North Point Food & Beverage Team has been tracking this week. We hope that you find the content insightful and a nice way to summarize the most noteworthy Food & Beverage events of the week.
Have a nice weekend!
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Glen Clarke
Head of Food & Beverage
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Captain Fresh acquires Central Seaway. | - Central Seaway Company, a Northbrook, Illinois-based frozen seafood distributor serving the US market, has sold to Captain Fresh, an India-based multi-species multi-origin seafood player.
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Foster acquires Greenville Produce. | - At Foster, we take great pride in bringing people and food together, and we could not be prouder than to announce that we are welcoming the Greenville Produce team into our Foster360 family.
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Grupo Bimbo takes over 6 Romanian bakery factories from Andrei family for EUR 100m. | - Grupo Bimbo, a Mexican baked-goods producer, has acquired six Romanian bakery factories from the Andrei family for EUR 100m.
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Sugar Foods acquires Concord Foods. | - Sugar Foods, a food company serving prominent foodservice, grocery, retail and restaurant brands, today announced the acquisition of Concord Foods.
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Roar Organic secures USD 10m investment from Factory LLC. | - ROAR Organic, the rapidly growing beverage brand known for its deliciously functional hydration products is pleased to announce a new USD 10 million investment by Factory LLC.
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FOOD AND BEVERAGE MUSINGS | |
Food execs signal a strong appetite for M&A in 2024. |
- Food makers, including Mondelēz International, are actively engaging in discussions and anticipate accelerating mergers and acquisitions (M&A) in 2024.
- In recent years, the food and beverage sector has focused on smaller “bolt-on” transactions, allowing companies to deepen their presence in specific categories without the complexities of large-scale deals.
- Companies are likely to be cautious and strategic in acquisitions, concentrating on trendy categories such as snacking, frozen foods, and better-for-you products.
- Companies like Hershey emphasize having a strong balance sheet for flexibility in making deals, while others, like Conagra Brands, are focused on paying down debt from past acquisitions but remain open to strategic and financially sensible opportunities.
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What’s on the horizon for CPG companies in 2024. |
- Economic uncertainty and inflation pressures from 2023 continue, with major banks tightening credit parameters, making it harder for businesses, especially in the food and beverage sector, to access capital.
- The food and beverage sector saw flatter growth in 2023 due to worsening economic conditions. Consumer spending patterns shifted, with a focus on cost savings, trading down, and prioritizing less expensive goods, particularly among those with incomes below $100,000.
- Increased focus on health and wellness in the food and beverage sector intensifies competition. Brands face the challenge of spending more to stand out in a crowded market, especially with big-box retail emphasizing healthier products.
- The market demands quick pivots to meet changing consumer demands and retailer buying patterns. A nimble approach to financing, coupled with a deep understanding of inventory dynamics, can enhance a brand’s competitiveness.
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Chocolate makers try a new recipe: less chocolate. |
- Mars Inc., known for popular brands like Twix and M&M’s, responds to record-high cocoa prices by reducing the size of its Galaxy chocolate bar while maintaining the price, highlighting a common strategy in the confectionery industry.
- Cocoa prices have surged due to issues in West Africa, the largest producer, including drought, disease, and structural problems. Futures surpassed $6,000 a ton for the first time, raising concerns about further increases.
- Faced with limited room for price hikes, companies are adopting strategies such as shrinking package sizes, using automation to reduce production costs, and promoting products with less cocoa or alternative flavors.
- The confectionery industry faces pressure, prompting companies to think beyond chocolate and consider a broader range of candy offerings to stay competitive in the evolving market landscape.
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FDA to allow yogurt makers to claim food lowers risk of type 2 diabetes. |
- Yogurt manufacturers can claim that consuming the dairy offering may reduce the risk of type 2 diabetes.
- The agency will permit companies to say that eating at least two cups of yogurt per week could lower a person’s chance of developing the disease that impacts an estimated 36 million Americans.
- Danone North America asked the FDA to issue the so-called qualified health claim in 2018 after observing “a growing body of research” that suggested a link between yogurt and type 2 diabetes. All dairy-based yogurt makers, including competitors Chobani and Yoplait maker General Mills, will now be able to use the claim on their products.
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Private Label Exploded in 2023 | Private label sales hit a record in 2023. |
- Private label products accounted for 20.7% of grocery industry unit sales in 2023, a record level, according to data released last week by the Private Label Manufacturers Association.
- Store brands also gained ground on national brands in terms of the number of units sold during the year.
- The figures reflect strong interest among retailers in enhancing and expanding their private label assortments even as grocery inflation has lost momentum.
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Private label sales move past $230 billion last year. |
- Private label sales in the United States increased by 4.7% in dollar sales in 2023, reaching $236 billion, surpassing the 3.4% growth in national brands dollar sales, according to research by the Private Label Manufacturers Association (PLMA) and Circana.
- The majority of the growth occurred in the first half of the year, with dollar sales from January to June rising by 8.2%, compared to a more modest 1.4% growth in the last six months. This suggests a potential return to the steady single-digit annual increases seen before the past three years.
- Peggy Davies, president of the PLMA, stated that the industry is healthier than ever, with one in every five grocery products in the U.S. being a private label, supplied by a store brand manufacturer.
- The “store brands phenomenon” remains well-positioned, emphasizing the need for retailers and consumer product companies to ensure their offerings provide strong perceived value for money and quality, addressing consumer preferences for value across income levels.
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Conagra Brands dives deep into frozen food flavors. |
- Frozen food volume sales in the US have increased by 5% in 2023 compared to 2019 levels, reaching $78 billion, according to Conagra Brands Inc.’s “Future of Frozen Food 2024” report.
- Consumers in the frozen food aisle are increasingly seeking global flavors. Asian-inspired products, especially appetizers like dumplings and wontons, have experienced significant growth, with a 375% increase in the last four years.
- Frozen foods with smaller serving sizes, including “frozen bites and minis,” have generated over $1.1 billion in sales. This segment caters to consumer preferences for portion control, convenience, variety, and snacking.
- The frozen food market is evolving to include health attributes such as clean label claims, free-from claims, high protein, whole grains, and hidden vegetables. This expansion provides more options for parents looking for convenient and nutritious choices for their families.
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Applegate to transition all beef hot dogs to regeneratively sourced. |
- Applegate, a subsidiary of Hormel Foods, aims to transition its entire beef hot dog portfolio to beef raised on verified regenerative grasslands by the end of 2025.
- Applegate has a history of advocating for higher standards in animal agriculture, including organic and humanely raised practices. Transitioning to regenerative sourcing aligns with the company’s commitment to preserving the land and promoting sustainable practices.
- Applegate launched the Do Good Dog hot dog in 2021, made with beef raised on verified regenerative US grasslands. This initiative helped transition 260,000 acres of grassland to regenerative practices, laying the groundwork for the broader transition of its beef hot dog portfolio.
- By taking this step, Applegate aims to incentivize farmers and the industry to embrace regenerative agriculture practices, moving them from niche to norm within the broader agricultural sector.
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Meat industry groups strongly oppose packers and stockyards act updates. |
- The US Department of Agriculture (USDA) has announced the finalization of the “Inclusive Competition and Market Integrity Under the Packers and Stockyards Act.”
- The rule is designed to ensure fair access to economic opportunities in light of market consolidation over the past three decades.
- Despite the USDA’s objectives, industry groups argue that the regulatory changes may impose substantial costs, expose businesses to legal risks, and potentially disrupt existing contracting systems, leading to challenges for both growers and businesses.
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Kraft Heinz enters plant-based meats with Oscar Mayer hotdogs and sausages. |
- Kraft Heinz is launching plant-based Oscar Mayer Hot Dogs and Sausages as part of its joint venture with NotCo — the first alternative meat innovation from the joint venture since its inception two years ago.
- The products, called NotHotDogs and NotSausages, incorporate plant-based ingredients such as bamboo fiber, mushroom, pea protein, and acerola cherry.
- Despite challenges in the plant-based meat category, Kraft Heinz and the Not Company believe there is an opportunity in the hotdogs and sausages segment.
- The joint venture sees potential in offering plant-based alternatives that address taste and texture issues, potentially attracting consumers looking for satisfying and affordable options in the hotdogs and sausages space.
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America’s condiment invasion is dividing households: ‘I want my fridge back.’ |
- Food companies and restaurants are introducing a plethora of new sauces, creating excitement for some but overwhelming others. Examples include Jack in the Box’s “Munchie Sauce,” Kraft Heinz’s multiple sauce releases, PepsiCo’s “Pepsi Colachup,” and Popeye’s truffle sauce for its chicken sandwich.
- The personal nature of sauce preferences is highlighted, with some individuals going to extremes, such as getting sauce-related tattoos or carrying small sauce packets in their purses.
- Kraft Heinz is actively participating in the sauce trend, launching limited-edition products like “Kranch” and exploring innovative concepts like the “Heinz Remix” customizable sauce dispenser.
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IFMA COEX 2024: Key themes and industry trends. |
- The International Foodservice Manufacturers Association (IFMA) hosted COEX 2024, a gathering for the food away-from-home ecosystem. Key themes included the need for innovation, a focus on “The Next Normal” in 2024, and strategies for maintaining customer traffic and profitability.
- Post-pandemic concerns for operators in 2024 included balancing growth and profitability, with a focus on consistent menu execution, loyalty programs, and staff engagement.
- Health and wellness engagement emerged as a key focus, with the fastest-growing chains being those that cater to health-minded consumers and the influence of wearable devices on changing eating habits.
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- Chobani launches cereal oatmilk to celebrate national cereal day — Dairy Foods
- Hidden Valley Ranch and Cheez-It join forces for condiment collab — Food Dive
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