All Things Food

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PEPSICO ACQUIRES FRUIT AND VEGETABLE SNACK COMPANY BARE FOODS

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Fizzing Out

The carbonated beverage sector has been facing increasing headwinds in recent years as Beverage Digest concludes that U.S. demand declined over the past 30-years, reports Reuters.

http://www.globalaginvesting.com/pepsico-acquires-fruit-vegetable-snack-company-bare-foods/

May 31, 2018
PepsiCo continues to work to diversify its portfolio away from carbonated soft drinks with the acquisition of Bare Foods, a producer of fruit and vegetable-based snack foods.

The deal will not only serve to expand PepsiCo’s better-for-you holdings, but will strengthen its standing in the snack category while buffeting its “Performance with Purpose” growth thesis.

“For nearly a dozen years, PepsiCo has been committed to Performance with Purpose, our vision of making more nutritious products, while also reducing added sugars, salt, and saturated fat. Bare Snacks fits perfectly within that vision,” said Indra Nooyi, chairman and chief executive officer of PepsiCo.

Founded in 2001 by a family of organic apple farmers in Washington State, Bare Foods began by selling baked apple chips at local farmers’ markets. Over the years, Bare has expanded its product line to include Apple Chips, Banana Chips, Coconut Chips, Beet Chips, Carrot Chips, and Sweet Potato Chips, reflecting the broadest offering of baked crunchy fruit and vegetable chips on the market. Each product Bare produces is made with simple ingredients that are Non-GMO Project verified.

“The Bare Snacks leadership team has done an outstanding job building a top-tier organization and a strong brand with authentic roots, and I couldn’t be more excited to welcome Bare Snacks to the PepsiCo family,” said Nooyi.

Bare Snacks CEO Santosh Padki added: “We are thrilled to work with the PepsiCo team to further our mission of bringing simplicity to snacking. With a shared passion for crunchy, better-for-you snacks, PepsiCo is the right partner to help bring our simply baked fruit and vegetable snacks to even more consumers across the world and continue to grow our brand.”

Fizzing Out

The carbonated beverage sector has been facing increasing headwinds in recent years as Beverage Digest concludes that U.S. demand declined over the past 30-years, reports Reuters.

Not only have health conscious consumers been turning away from soft drinks, but several cities across the U.S. have voted to approve taxes on high-sugar beverages as a means to mitigate health issues linked to their consumption.

In response, soft drink giants have been investing in functional, bolt-on acquisitions that offer diversification into the health and wellness aisle, while also providing a hedge against new tax laws and catering to changing consumer tastes.

In December 2016, both PepsiCo and Dr Pepper Snapple announced major acquisitions aligning with this shift.

Dr. Pepper Snapple Group announced that it has agreed to acquire Bai Brands LLC, a better-for-you brand portfolio of premium antioxidant-infused beverages including carbonated flavored water, coconut water, and ready to drink teas for $1.7 billion in cash. While PepsiCo announced a definitive agreement to acquire KeVita – a leading North American maker of fermented probiotic and kombucha beverages – for an undisclosed amount. Fortune reported, however, that the deal was in the neighborhood of $200 million.

In the case of the PepsiCo – the addition of KeVita to its lineup will help the company meet its pledge that two-thirds of its global beverage portfolio will contain less than 100 calories from added sugar by 2025.

Snacking is Strong

The deal for Bare Foods will also help Pepsi’s Frito Lay better-for-you snack business.

Over the past several years, better-for-you snacking has demonstrated continued growth as consumers are more often opting for snack foods as health plays a greater role in food choices, and younger consumers blur the lines between snacking and formal meals, reports Food Dive.

These shifts in consumer sentiment are driving larger companies to reconfigure their portfolios to include smaller CPG companies and startups that closely identify with these trends. The addition of smaller, forward thinking brands also gives larger CPG companies such as PepsiCo a channel through which to pursue innovation.

“Bare premium baked fruit and vegetable chips are an exciting expansion of Frito-Lay’s better-for-you snack offerings,” said Vivek Sankaran, president and chief operating officer for Frito-Lay North America. “While we will continue to offer the current Bare Snacks product line, we look forward to working with the Bare Snacks team to deliver new, innovative options, and ultimately expanded distribution, to meet the ever-growing consumer demands for authentic and nutritious snacks.”