B&G Foods sells Back To Nature to Barilla as part of broader portfolio reshaping

By Elizabeth Crawford

- Last updated on GMT

Source: Back to Nature
Source: Back to Nature

Related tags B&G Foods Barilla Snacks plant-based

The sale of snack brand Back To Nature to Barilla Group by B&G Foods for an undisclosed sum marks the next phase in B&G’s reorganization intended to clarify the company’s focus, pay-off debt as interest rates rise and lower its dividend to a more sustainable level while still providing strong yield to its shareholders.

At the same time, the acquisition gives Barilla a larger footprint in the US bakery and snacks category as part of a strategic effort to build a “strong multi-brand bakery platform”​ to complement its dominating pasta portfolio.

The exchange also reflects a broader trend in the food and beverage industry in which many companies are rethinking their offerings in response to shifting consumer demand related to rising prices and the pandemic-sparked trends of eating at home more, and buying products that are better-for-you, comforting and affordable.

‘Back to Nature doesn’t really fit in what we’re doing anymore’

While B&G Foods is more often than not on the buying end of deals, the sale of Back To Nature, which includes cookies, crackers, nuts, granola and more, signals a strategic shift in how the company is thinking about its portfolio and the amount of debt it is willing to carry.

Earlier this year, B&G Foods revealed that it was reorganizing its diverse portfolio, which includes Green Giant, Crisco, Cream of Wheat, Grandma’s Mollasses, Skinnygirl, SnackWell’s and more, into four distinct categories: spices and seasonings, meals, frozen and vegetables and specialties.

“These units are intended to clarify portfolio focus and future platforms and push accountability down to improve management and decision-making. Although early days, we are already building stronger plans, identifying margin improvements, making faster decisions and more closely integrating demand and supply,”​ CEO Casey Keller told investors during the company’s most recent earnings call last month. “I am confident this structure will sharpen our focus, build critical capabilities and deliver improved sales and margin performance over time.”

As part of this reorganization, Keller revealed that B&G was actively seeking to sell the Back to Nature brand and had “initiated a strategic review to identify other potential divestitures that will shape the B&G Foods portfolio for future focus and strength.”

The sale of Back to Nature follows that of Pirate Brands, which significantly reduced B&G’s presence in the snack segment.

“Back to Nature sort of doesn’t really fit in what we’re doing anymore,”​ Keller said, noting that the company is carefully reviewing its offerings to ensure they play to its strengths and where it hopes to grow going forward.

“There are certainly some older businesses that we could look at and see if we could monetize those at a level that makes sense and maybe someone that makes a lot more sense for,”​ he added.

The proceeds from these sales also will help accelerate B&G’s efforts to reduce its debt at a time when interest rates are steadily rising to combat inflation, added CFO Bruce Wacha. He also noted the divesting non-core assets should lower the company’s dividend to a more sustainable level to continue to provide strong yields to shareholders.

Barilla aspires to build ‘significant presence in the US baking industry’

The appeal of Back to Nature for Barilla is likely as a well-known snack brand in the US, which is an area where it wants to build out its offerings.

Barilla is best known in the US for its pasta, but it does have a toe hold in the bakery segment with Wasa crispbread, and a larger portfolio of baked goods in Europe that includes cookies, cakes, breads and cereal.

“At Barilla, we aspired to build a long-term and significant presence in the US baking industry and the operating reminds me of when we first started our journey with pasta over 25 years ago and we are now the market leader,”​ Guido Barilla, chairman of the Barilla Group, said in a statement, adding: “The acquisition of Back to nature is a key step for this exciting journey.”

He explained that the brand is a “natural choice” for Barilla given its focus on balancing health and indulgence.

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