Acquisition adds muscle to Hormel Specialty Foods

by Keith Nunes
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AUSTIN, MINN. — The pending acquisition of CytoSports, Inc., the maker of Muscle Milk, will put a well-known brand at the lead of Hormel Foods’ Specialty Foods business. The company also hopes the combined offerings of Rev wraps, Skippy Singles and Muscle Milk will attract more younger consumers seeking protein-based, on-the-go options to the Hormel fold.

“This acquisition will serve as a growth catalyst for our Specialty Foods segment by adding a branded franchise in the fast-growing sports nutrition space,” said Jeff Ettinger, chairman, president and CEO of Hormel Foods, in a conference call with financial analysts to discuss the acquisition. “The deal will also leverage the capabilities of our existing team at Century Foods within the Specialty Foods segment, who specialize in the manufacture of protein-rich sports nutrition products. Muscle Milk is the leading brand in shelf-stable ready-to-drink protein beverages, and leads the fast-growing sports nutrition category in brand awareness.”

Hormel announced on June 30 it was acquiring CytoSports Holdings, Inc., for approximately $450 million. Products manufactured under the company’s Muscle Milk brand include ready-to-drink beverages, protein-based powders, sports nutrition bars and energy chews.

Hormel has appointed Greg Longstreet, president of Farmer John, Vernon, Calif., as CEO of CytoSport.

Based in Sparta, Wis., Century Foods International specializes in dairy and vegetable proteins, nutraceuticals, including muscle-building and weight-loss powders, and ready-to-drink beverages. The business unit has four manufacturing plants and employs approximately 400.

“Our Specialty Foods business is something that has been part of the portfolio for the last several years, but was an area that we lacked a branded presence,” Ettinger said. “It was almost all custom manufacturing or private label business.”

CytoSports Holdings has been for sale for some time, and Ettinger noted the company’s status of being on the block may have limited its growth prospects.

“That has potentially diverted some attention away from the growth momentum that they had previously enjoyed,” he said. “But when we look at the robust categories that are still going on out there, the international prospects, and the fact that it is a leading brand that we think is leverage-able with innovative items, we absolutely think we can grow it.”

The acquisition also will add to Hormel’s efforts to reach younger consumers interested in on-the-go options.
“Today’s consumers are busier than ever, and are seeking protein-rich foods that can be eaten on the go,” Ettinger said. “As we have stated in the past, our team is working to meet this consumer need with innovative products such as Rev snack wraps and Skippy Singles. Muscle Milk products represent another step forward in our leadership of delivering protein-rich foods in a portable and immediate form. The portability and convenience of the Muscle Milk protein beverages, which require no refrigeration, will also broaden our appeal with a younger audience.”

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