Hillshire to expand its healthy halo
May 7, 2014
by Keith Nunes
CHICAGO — The recent acquisition of Van’s Natural Foods will extend the Hillshire Brands Cos.’ reach in the retail frozen food aisle, but the company sees additional opportunity by leveraging the healthy halo that hovers over the Van’s brand.
“ … One of the other things I really like about Van's is the extendability into other categories,” said Sean Connolly, CEO of Hillshire Brands, on May 6 in a conference call to discuss the company’s third-quarter earnings. “That's not an uncommon thing when you’re dealing with the health and wellness equity.
“One of the analogies I often point to is when Safeway created the O Organics brand, and Eating Right brands, they were successfully able to take those trademarks into a number of healthy categories, where they went up against incumbent brands who had market leading positions but really didn’t have a lot of credentials in the health and wellness area.
“And what we’ve seen through our analysis is that when you’ve got a brand that can have those credentials and deliver on the promise of great taste, you can gain a lot of market share and do so profitably. And that’s exactly what we expect to do with Van's.”
Van’s is a manufacturer of gluten-free products, including chips, cereals, crackers, french toast, pancakes, waffles and snack bars. The company also sells non-gluten free french toast, pancakes and waffles.
On April 21, Hillshire Brands said it had reached an agreement with the private equity firm Catterton Partners to acquire Van’s Natural Foods for $165 million.
“The acquisition lines up nicely with our criteria,” Connolly said. “It’s a strong brand that’s growing. It’s margin accretive. It offers a compelling consumer benefit; in this case, real health and wellness credentials.
“Further, it helps us expand our presence in frozen breakfast and provides new opportunities in the center store. I view the fact that it further diversifies our COGS base as a real positive.”