Kraft Heinz agrees to buy paleo company Primal Kitchen
We have seen a growing number of food and beverage companies acquiring businesses to help reposition their offering to include healthy, natural and good for you food. Kraft Heinz is joining a group that includes Hershey, Kellogg, PepsiCo, and Coca-Cola among others as they look to rise the tailwinds associated with our Clean Living investing theme.
With the Kraft Heinz purchase of Primal Kitchen, we’d note the valuation of 4x sales, which helps explain why Kraft Heinz is also launching a venture arm, Springboard, that will work with food start-ups that we suspect will also be in tune with our Clean Living investing theme.
Kraft Heinz said Thursday it plans to buy paleo condiment and dressing company Primal Kitchen for about $200 million, as the ketchup maker looks for a platform to help compete against upstart brands.
Primal Kitchen is expected to generate about $50 million in revenue this year, Kraft Heinz said. The deal is expected to be completed in early 2019.
Primal Kitchen was founded by food blogger Mark Sisson, who started “Mark’s Daily Apple” in 2006 and has written a number of diet and exercise books. The company makes paleo-friendly products including mayo, avocado oil and dressings. It says its products are without processed or artificial ingredients, added sugars, soybean or canola oils.
Paleo diets focus on foods that were available in the Paleolithic era, like nuts, seeds, lean meats and vegetables. The idea, which has gained a strong following in recent years, is that the human body is best suited to eat the foods that early humans ate rather than the modern diet, which includes processed foods.
Kraft Heinz has begun to follow the playbook written by many of its peers seeking growth as eating habits change. For most Big Food companies, it is hard to duplicate the innovation and culture necessary to create the same success seen by younger brands like Kind Bar.
As such, Kraft Heinz joined other Big Food brands this year in launching a venture arm, Springboard, to partner with food start-ups.
Using Primal Kitchen as a platform would also echo a strategy that others have employed, to varying degrees of success. Kellogg has said it wants to use its $600 million acquisition of RXBar as a platform and Hershey is looking at its acquisition of Amplify Brands as a platform for its growing suite of snack brands.
Source: Kraft Heinz agrees to buy paleo mayo and dressing company Primal Kitchen
