Processed Food – Page 13

Golden Malted rebrands to Golden Waffles

GLEN MILLS, PA.– After 87 years some of the country’s biggest distributors of waffle irons as well as waffle blends is actually going far adjustment: coming from Golden Malted to Golden Waffles. The adjustment “a lot better affiliates the brand name along with offerings clients actually understand as well as adore,” the provider said

” Our team are actually modifying our label to Golden Waffles since that’s what our company perform– our company help make gold, fresh-baked waffles,” claimed Michael DiBeneditto, who joined the company in October 2023 as chief executive officer. “As a service-oriented company, our clients are actually regularly leading of thoughts. Everyday, Golden Waffles’ solution stands apart through working as an expansion of our clients’ working staff. Our devotion to servicing our clients, while supplying scrumptious, artistic answers continues to be sturdy as our company undergo this rebrand.”

As component of the rebrand, Golden Waffles has actually presented a brand new company logo as well as site. The upgraded advertising is actually anticipated to start turning up on devices as well as packing over the following handful of months, the provider claimed.

” Through streamlining our label as well as renewing our appearance, our company are actually creating it very clear that our atypical emphasis is actually to take delight to clients through offering the very best fresh-baked waffles in the food items solution field,” claimed Alissa Davis, that signed up with the provider in July as bad habit head of state of advertising for Golden Waffles. “Our comprehensive plan– coming from straight door-to-door waffle mix shipping to onsite solution as well as routine maintenance– permits drivers pay attention to the pleasant things, like creating attendees grin.”

Prior to participating in Golden Waffles, Davis was actually scalp of advertising as well as service progression at Advanced Meals Products LLC. Previously, she devoted almost 16 years at J&J Treat Foods Corp. in an assortment of advertising roles. She likewise has actually done work in classification progression at The Hershey Co.

Golden Waffles is actually the biggest vendor of waffle irons as well as waffle mix to the friendliness as well as foodservice business. The provider’s blends, garnishes as well as flavors are actually dispersed to greater than 50,000 client sites around The United States as well as greater than 60 nations worldwide. The rebranding happens a little bit of over a year after the provider was acquired by Arbor Investments coming from Roch Funding.

Aside from the rebranding, Golden Waffles claimed it has actually called Roxana Oxtoby as primary development police officer. Oxtoby recently was actually supervisor of purchases at Leprino Foods. Previously, she was actually bad habit head of state of purchases as well as item progression at Fresh & & Ready Foods. Previously in her job she was actually a local purchases supervisor at Schwan’s Co. as well as likewise devoted almost 4 years at Hormel Foods in an assortment of purchases as well as monitoring functions.

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Mars’ $29b Kellanova takeover leads bakery and snack M&A surge

Kellanova and Mars

Expected to be the biggest transaction of 2024 is the acquisition of Kellanova by candy giant Mars Inc, a deal that values the Pop-Tarts and RXBar maker at nearly $30bn. Mars is reportedly paying $83.50 per share for Kellanova, representing a substantial premium over the company’s recent stock price. The all-cash deal by the privately held company also takes on $6bn in net debt, according to people close to the deal. Mars boasts annual sales that exceed $50bn.

According to the Wall Street Journal, the Kellogg Co. spinoff has a market value of around $22bn, but shares skyrocketed once the news broke. At the time of writing, the share price of Kellanova is up 8%, at $80.54. On August 7, the company reported better-than-expected second-quarter results and raised its 2024 outlook.

The takeover comes less than a year after the split of Kellogg Co into two business entities.

WK Kellogg Co is Kellogg’s North American cereal business, which includes brands like Frosted Flakes, Froot Loops, Special K, Rice Krispies and Corn Flakes.

The second entity – Kellanova – stewards a suit of iconic brands – including Pringles, Cheez-It, Pop-Tarts, Nutri-Grain, RXBAR and others – along with plant-based labels like MorningStar Farms. The unit also oversees Kellogg’s international cereal brands such as Frosties, Zucaritas, Krave and Miel Pops; its noodle operations; and North American breakfast items like Eggo waffles.

The Kellogg’s name, however, remains on brand packaging for both companies in all territories around the world. The Mars takeover will create a powerhouse in the global snacks market, consolidating the candy maker’s iconic brands – including M&M’s and Snickers, among others – with Kellanova’s extensive portfolio. Analysts believe the deal is likely to pass regulatory muster as the two have very few overlapping products.

The deal is also one of the largest packaged-foods transaction since the merger between Kraft Foods Group and HJ Hein – now known as Kraft Heinz Co. This move is seen as part of a broader trend in the food sector, where companies are consolidating to achieve scale amid changing consumer preferences and economic pressures.

A notable trend is the continued consolidation within the bakery ingredients sector, which has seen intense M&A activity over the past decade. Companies like Orkla and Puratos have been particularly active, acquiring numerous businesses to expand their product portfolios and geographic reach. This consolidation is expected to lead to reduced costs for customers as synergies are realized, although it may also result in less choice over time.

WK Kellogg

Meanwhile, the North American cereal business of Kellogg Co is implementing an ambitious strategy to streamline its manufacturing network to offset flagging sales as consumers switch to private labels to cope with sticky inflation.

Under the plan, the Froot Loops maker will shut down its Omaha, Nebraska, plant by the end of 2026 and scale back production at its Memphis, Tennessee facility, in late 2025. It also intends to increase production at its Battle Creek, Michigan; Belleville, Ontario; and Lancaster, Pennsylvania plants, with planned spending of around $450m-$500m on its supply chain efforts.

The reorganization is expected to result in cumulative restructuring pretax charges of between $230m and $270m. The North American cereal business posted net sales of $672m for its second quarter. Shares fell more than 2% after the company projected 2024 adjusted net sales to come in at the lower end of its prior forecast range of 1% growth to 1% decline.

The Nebraska shutdown will reduce the Special K maker’s headcount by around 550 people; however, opportunities will open at the plants where production would increase.

WK Kellogg employed around 3,150 workers at the end of last year.

Corbion and Novotech

The sustainable ingredient specialist has acquired the Delhi-based bread improver business from Novotech Food Ingredients to further its ongoing strategy to expand geographically and in this instance, to fortify its presence in the Asia Pacific region.

“By enlarging our footprint, augmenting our portfolio with products tailored to local market needs and enhancing our collaboration with India-based global customers, we’re showing our commitment to sustained growth in India and broadening our reach into Asia,” said Andy Muller, president of Corbion’s Functional Ingredients and Solutions division.

“Leveraging local manufacturing strengths will help reinforce our position as a global solutions provider that is regionally relevant.”

The authentic, locally developed offerings from the bread improver business is a natural fit with Corbion’s existing portfolio.

“We want our customers to make the most of the advantages that come with a leading global supplier,” added Muller.

“Our worldwide network offers them the flexibility and confidence of consistent sourcing. Yet, we also know that local expertise adds significant value. This acquisition strengthens Corbion’s capacity to deliver both a global approach and regional insights, ultimately providing our customers with greater value.”

AB Mauri UK&I and Romix Foods

The global supplier of yeast and bakery ingredients has completed the acquisition of Romix Foods, a specialist food blending business based in Leigh, northwest England, which is specifically known for its allergen ingredients.

“This strategic acquisition enables AB Mauri to expand its footprint in this growing segment and provides additional flexibility to our wider UK manufacturing footprint,” said David Cooper, MD of AB Mauri UK&I.

“This ensures that we can continue to meet the demands of increasing variety and complexity from the markets we serve.”

Romix MD Mick McGowan and the existing management team will continue to lead the company.

“We are committed to leveraging the strengths of our combined organisations to foster growth, innovation, and overall customer satisfaction,” said McGowan.

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Is Publix’s ‘Pub Sub’ Really The Ultimate Grocery Store Deli Item?

It seems like sub sandwiches are always popular, and Publix subs are the stuff of grocery store legends. In Florida, the grocery giant’s home state, the sandwiches are usually referred to simply by the two-syllable moniker “Pub sub.” Now that Publix has locations in eight Southeastern states, the beloved sandwiches have gained notoriety (and adoring fans) far beyond Florida.

Pub subs have been a fan favorite since 1992 when they debuted at a Publix store in Marietta, Georgia. Although the Pub sub didn’t technically originate in Florida, the Sunshine State can safely lay claim to the sandwich. The hearty subs have been a staple of tailgate parties, beach trips, picnics, and parties across the state for three decades. If Florida had a state sandwich, the Pub sub would definitely be in the running — perhaps right next to the iconic Cubano (What can I say? Florida has a lot of great sandwiches).

To read the rest of the story, please go to: The Takeout

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Consumers still reaching for ‘feel good’ products: Whole Foods exec

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Despite facing higher food prices, consumers are still looking towards more premium products with more nutrients and less added sodium and sugar, said Jeff Turnas, senior vice president of culinary at Whole Foods Markets.

“There are always fads with grocery shopping that come and go, but what we try to do is stick to our quality standard because good quality food will never be out,” Turnas said.

As inflation persisted in 2024, food prices experienced continued hikes and consumers suffered.

July, though, showed some signs of relief as food-at-home prices rose at a 1.1% annual rate while inflation increased 2.9% — its lowest level on an annual basis since March 2021, according to Consumer Price Index data released last week by the U.S. Bureau of Labor Statistics.

Even as grocery inflation has slowed, though, consumers are still concerned over food costs. This week, Vice President Kamala Harris promised a federal ban on food price-gouging as part of proposed economic policies which she said would help the food industry become more competitive.

Consumers seek value and quality in their purchases.

Keto and paleo, for example, were trending for some time, according to Turnas, but now consumers seem to be more focused on well-rounded whole foods.

Many consumers have also been turning to supplements for added nutrients, or are more focused on how specific spices and supplements have a positive effect on health and wellbeing, said Turnas.

The specialty food ingredient market size, which includes dietary vitamins and supplements, was $112.4 million in 2022 and is expected to reach $168.6 million by 2031, growing at a compound annual growth rate of 5.2%.

The sweetener market, for example, is going through a period of massive innovation, with companies using ingredients like the honey truffle and other sweet proteins to achieve a taste similar to that of sugar.

One way that Turnas said Whole Foods looks to stay ahead of trends like these is to take shopping behaviors of consumers and turn them into products.

With the supplement surge, Turnas noticed an uptick in turmeric. The spice is rich in phytonutrients and has properties that can reduce inflammation and improve gut health.

Couple that with how sourdough bread has been trending on social media, and Turnas saw an opportunity.

The grocer will be coming out with a pumpkin turmeric sourdough bread in the fall.

Developments in research and development have also allowed the grocer to predict shopping behaviors and act accordingly.

“We used to make products based on what we thought people would want, now we can actually test those theories and see them pay off in practice,” he said

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CEO says Target is ‘returning to growth’

MINNEAPOLIS — Target Corp. saw fiscal 2024 second-quarter earnings jump more than 40% as chairman and chief executive officer Brian Cornell said the mass retailer is back on a growth track — including its first quarterly comparable-sales gain in over a year.

Reported and adjusted net earnings for the quarter ended Aug. 3 swelled nearly 43% to $1.19 billion, equal to $2.57 per share on the common stock, from $835 million, or $1.80 per share, a year earlier, Minneapolis-based Target said. The result bested Wall Street’s top-end estimate of $2.34 in adjusted earnings per share (EPS).

“The strength of our entire team was clearly evident in our financial performance, which came in well above our expectations,” Cornell told analysts in an Aug. 21 conference call. “On the top line, we met our goal of returning to growth but moved well beyond that baseline expectation. More specifically, our Q2 comp sales grew 2% at the very top end of our guidance range. On the bottom line for the quarter, our EPS of $2.57 was well above the high end of guidance, representing growth of more than 42% over last year. Among the drivers of our comp sales, we’re pleased that our second-quarter growth was driven entirely by traffic, reflecting the combined benefits of the multiple guest-focus initiatives we outlined in our financial community meeting back in March.”

Target’s second-quarter revenue totaled $25.45 billion, up 2.7% from $24.77 billion a year ago. Overall comparable sales rose 2% year over year. That marked the first time comp sales hadn’t decreased since flat results in the fiscal 2023 first quarter and the first comp-sales increase since a 0.7% uptick in the fiscal 2022 fourth quarter. Target said the 2024 second-quarter result reflected gains of 0.7% in same-store sales and 8.7% in comparable digital sales.

Operating income climbed almost 37% to $1.64 billion, which Target attributed to sales growth and a 190-basis-point gain in gross margin. Operating income margin grew 160 basis points to 6.4%.

“Consumers have shown remarkable resilience in the face of multiple challenges over the last several years, and they remain resilient today,” Cornell said. “Given the significant headwinds they’ve faced with inflation over the last few years, consumers continue to focus on value. They work hard to manage their household budgets. And while they continue to turn out and shop around holidays and other seasonal moments, many are delaying purchases until the moment of need.

“Against that backdrop, our team continued to focus on providing unbeatable value for our guests. Of course, that starts with a focus on low everyday prices, including our recent price reductions on frequently purchased items.”

He referred to a plan Target announced in May to lower the daily regular prices on about 5,000 popular items. The retailer also is offering personalized deals via the Target Circle loyalty program, which added more than 2 million members in the quarter, and savings via the Target Circle 360 online benefits program and Target Circle credit/debit card.

Traffic rose 3% in the second quarter, with all six core merchandising categories — food and beverages, apparel and accessories, beauty and personal care, household staples, hardlines, and home furnishings and decor — delivering traffic growth.

Rick Gomez, chief commercial officer, said Target saw “notable areas of strength in both discretionary and frequency categories.” Food and beverage sales grew by low single digits and helped drive traffic with hundreds of new summer items in snacking, grilling and entertainment, along with a candy aisle transition that ushered in better-for-you items like low-sugar treats, he said.

For the first half, Target posted net income of $2.13 billion, or $4.60 per share, up over 19% from $1.79 billion, or $3.86 per share, a year ago. Total revenue dipped 0.2% to $49.98 billion, with comp sales down 0.9%. Operating income advanced 19% to $2.93 billion.

Citing the first-half profit performance, Target raised its 2024 earnings outlook to adjusted EPS of $9 to $9.70 from $8.60 to $9.60 previously. However, the company fine-tuned its comp-sales guidance of flat to 2% growth, projecting the result likely will be in the lower half of that range. Target opened 10 new stores in the first half, finishing the period with 1,966 overall, and has more than 60 store remodels underway.

The positive second-quarter report lifted Target’s stock price 17% to around $161 per share as of late morning trading on Aug. 21.

Cornell, said Target’s focus is “staying on offense while maintaining overall cautious outlook, a stance has worked well for us over the last few quarters.”

“We’re focused on retail fundamentals and strong execution,” he said. “This includes our commitment to being in-stock and reliable, even as we maintain a prudent inventory position. It also includes our focus on delivering speed and convenience in every fulfillment channel while providing efficient and friendly service to our guests in every store, every day. We’re also looking to build on momentum we’ve been seeing in discretionary categories. Trends have already improved significantly, and we see much more opportunity ahead of us.”

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How an ultra-processed food tax will affect manufacturers

A recent survey of UK consumers claimed most Brits want a tax on junk and ultra-processed food manufacturers, believing it would help tackle the obesity crisis.

Consumers in the UK have an apparently growing vendetta against UPF, with near two-thirds (62%) of them telling a Health Foundation survey unhealthy food advertisements should be banned from TV and online before 9pm, as well as 53% of them demanding a tax on UPF makers.

But it’s not only Brits. EU consumers also villainise UPFs, with 67% believing they contribute to rising obesity levels and other health issues, according to a recent EIT Food Consumer Observatory survey.

EU citizens are also less trusting of UPFs in general, with 40% saying the industry isn’t regulated enough and 67% not liking it when their foods contain unrecognisable ingredients.

So, if one was implemented, how would a tax impact manufacturers? And would it help slim down consumers’ waistlines?

Who would police a UPF tax?

Launching a UPF tax would be difficult to manage and unlikely to settle consumer concerns, according to Danny Butt, director of consultancy Food Innovation Solutions. “If you’re talking at a macro level, as a tax, it could be similar to the sugar tax [in the UK], so if it’s built in line with that then you have a situation where some brands have to cost reduce or absorb [the tax].”

However, the increased cost of living has already led to product price hikes, while retailers are also reluctant to pass on additional costs to customers. “But the impact would be specific to the brands, so a company like Coke could put prices up because they are a market leader, but private label and smaller businesses wouldn’t be able to stomach it,” he continues.

And then there’s the continuing debate around what a UPF is. Consumers often consider UPFs to be high fat, salt and sugar junk foods, “but when you tell them it’s also their charcuterie in the fridge, their views change”, says Butt, “they don’t want foods like those to be taxed”.

How would a UPF tax affect consumer health? Source: Getty

A world first UPF tax

A UPF tax has been enforced in Columbia for some months now. Considered to be the world’s first, in 2023 Colombia enforced a tax of 10% on certain UPF foods, increasing to 15% this year with the expectation it will rise to 20% by 2025.

The tax has reportedly already had a mild effect on UPF consumption, with sales down 5% by the end of 2023, Kantar data showed.

Colombia has not used the Nova system to define which foods are subject to the UPF tax. Instead, it has implemented a threshold system covering salt, sugar and saturated fats.

Milk products with added sugar, sausages, cold cut meats, confectionery, snack, bakery and several other food types have all been included in the tax. However, traditional Colombian cuisines are exempt, including dulce leche and salchichon.

“There are a range of issues with a UPF tax,” says Klaus Grunert, EIT Food Consumer Observatory director and professor at Denmark’s Aarhus University. “There is no clear definition of what a UPF is. There needs to be a definition of what it is, but that is for regulators who would draw on expertise from nutritionists.”

If a tax were to be implemented, Grunert suggests it could be based on the level of excessive negative nutrients a product contains, rather than the level of processing used to produce it. “But in Denmark, for a short period [in 2011], we had a tax on saturated fat that didn’t survive [and was repealed in 2012] due to all sorts of practical issues,” he concedes. Butt, however, suggests using a traffic light system.

Professional bodies and food industry stakeholders already utilise rough definitions for the levels of food processing using the Nova classification system. It places foods into categories by degree of processing, such as unprocessed, processed ingredients, processed foods or ultra-processed foods. But it has been criticised for not specifying what UPF is ‘healthy’ or ‘unhealthy’ and for relying on the levels of processing and not nutrition levels.

Do consumers know what UPF is?

There is currently no official agreement on what a UPF of concern might be or how it would be categorised in terms of ‘good’ and ‘bad’.

How can consumers be educated on UPF? Source: Getty

And with that, there is a need for consumer education around UPF as a whole, but as both Butt and Grunert highlight, it’s not a linear story. “People have to make their own call and that all starts with education,” Butt explains. “Yet sometimes even a little information is often more dangerous than no information,” he adds, pointing out that national and international news coverage often lumps only junk food into the UPF category, when it’s a much bigger picture than that.

A lack of consumer education around UPF is a big issue, a point surfaced by multiple data sets in recent months. In the EIT Food Consumer Observatory study, consumers found it difficult to place foods into the Nova classifications, showing a lack of knowledge.

“Unless something [robust] is put in place, then the debate [of what UPF is] continues to go round in circles,” says Butt. “When you’re dealing with consumers, they can’t differentiate between an additive or a ‘nasty’.

“Unless someone weighs in with a sensible decision, then there will be no unbiased, useful rule to work with. But, the industry needs to do a better job of communicating what processes are used.”

When it comes to UPF policing, both Butt and Grunert agree it’s the job of governments. And while there may be a reluctance from governments to take account of it now, as the debate and demonising of certain foods grows, they may want to soon to ensure manufacturers can work to clear frameworks.

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Butterball’s Togetherness Report Reveals Consumer Behavior Around Shared Meals

The turkey company’s survey highlights how grocery stores can attract shoppers preparing for a meal with family and friends, year-round

GARNER, N.C. – Butterball, the best known and most loved* brand of turkey in the U.S., released the Butterball Togetherness Report: Capitalizing on Consumer Appetite for Shared Meals, uncovering how consumer shopping behavior is impacted when preparing for shared meals beyond the holidays and opportunities for grocery retailers to capitalize on these behaviors.

The report examines shared meals – planned meals prepared and eaten in a home with other people, whether family or friends – to highlight the dynamics of human connection. Shared meals can include immediate family meals, casual meals with family or friends, and special occasion meals.

Conducted among a sample of more than 2,000 grocery shoppers aged 24 and up in the Contiguous United States, the report sheds light on key trends shaping modern dining experiences that can help retailers curate their shopping experience to consumer preferences.

The new Butterball Togetherness Report uncovers the role of shared meals throughout the year as well as the barriers Americans face when planning them. It also illuminates opportunities for grocery retailers to help consumers overcome these obstacles and bring people together through food more frequently.

“For 70 years, Butterball has helped new and seasoned hosts prepare the perfect Thanksgiving centerpiece to foster togetherness through food, however there are numerous opportunities and a strong desire for people to gather over shared meals throughout the year,” says Kyle Lock, Butterball’s VP of Retail and International Marketing. “We examined the changing dynamics in human connection, and by sharing these insights, Butterball hopes to shed light on opportunities for grocery retailers to create a tailored shopping experience for consumers. Butterball believes in the power of food to bring people together and anticipates this trend will continue to grow, bringing additional moments of impact for grocery retailers.”

While Americans want to gather for meals, they find that busy schedules are the top barrier holding them back from doing so as frequently as they would like. However, shoppers aren’t willing to compromise on their shared meal – they are keen to shop in store for shared meals, rather than using time-saving options such as ordering online for pickup or delivery. Additional barriers cited include limited hosting space, insufficient time to plan and prepare meals, limited cooking abilities and lack of new recipe ideas. One item that is not a major consumer concern when shopping for a shared meal: expense. The report found that shoppers typically spend more on groceries for shared meals, with younger generations (Gen Z and Millennials) spending significantly more on meals shared in their home than older generations.

For large grocery retailers, the report highlights opportunities to help consumers solve some of these obstacles to save time planning and shopping for shared meals. Grocery retailers can help time-crunched, shared meal shoppers by providing digital options such as publishing recipes online and in-app ingredient lists. Grocery retailers can adapt to other shopper preferences by making recipe bundle kits or updating store organization to create an easy, in-store shopping experience, where shoppers have a sense of safety, inclusivity, and enjoyment.

Additional key takeaways and trends from the report are found below.

How Grocery Retailers Can Respond to Attract Shared Meal Shoppers and Boost Loyalty:

Help consumers shop for more frequent shared meals and make them more satisfying.
Reduce time and energy spent planning meals through store organization, recipe bundles and friendly customer service.
Provide inspiration, instill confidence, and create a fun shopping experience to attract younger consumers.

Full Tables Lead to Full Hearts

80% of those who have increased shared meals over the last two years say their lives are very rewarding, compared to only 60% of those who have shared meals less often
Younger consumers are willing to spend more money on hosting shared meals compared to Boomers, with Younger Millennials and Older Gen Z spending 55% more and Older Millennials spending 51% more.
69% of all respondents express a desire for increased shared meals, despite busy schedules as the primary barrier.

Unveiling the Shopper’s Palate:

87% of shoppers favor physical grocery stores over online or delivery options when shopping for shared meals.
88% of participants agree that some grocery stores are more preferable than others when shopping for shared meals, citing factors such as ease, convenience and product offerings over price and value.
Local specialty stores (3.25x increase) and wholesale stores (2.5x increase) draw disproportionately more consumers who are shopping for shared meals, compared to regular grocery runs.

For more information, the full Butterball Togetherness Report: Capitalizing on Consumer Appetite for Shared Meals can be found at www.butterball.com/about-us/our-commitment/butterball-togetherness-report.

About the Study

A 15-minute survey was fielded from May 1-14, 2024, in the contiguous United States. The survey reached 2,127 respondents ages 24+ who share or are primary grocery purchasing decision-makers for their household, and who had some type of shared meal more than once in the last year.

About Butterball

Butterball, LLC, headquartered in Garner, North Carolina, is the best known and most loved* brand of turkey in the U.S. Bringing people together over wholesome homemade meals for more than 60 years, the company provides retail and foodservice products to customers in more than 30 countries. Butterball is committed to being an industry leader in quality, food safety and animal care and well-being, and was the first major turkey company to voluntarily achieve certification through American Humane. The company employs over 6,500 team members who work in production facilities, live operations and offices across Arkansas, Illinois, Kansas, Missouri and North Carolina. For consumer questions or information, visit Butterball.com or call the Butterball^® Turkey Talk-Line^®, 1-800-BUTTERBALL (1-800-288-8372).

*Source: 2023 Kantar Brand Tracking Oct 2023 n=351

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Kamala Harris proposes food ‘price-gouging’ ban as part of economic platform

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Dive Brief:

Vice President Kamala Harris promised a federal ban on food price-gouging as part of proposed economic policies she revealed in a Friday speech for her presidential campaign.
Harris said her “first-ever” federal ban would include “new penalties for opportunistic companies that exploit crises and break the rules.” She did not provide further details.
FMI – The Food Industry Association took aim at price-gouging claims while the National Grocers Association called for stronger enforcement of the Robinson-Patman Act, an antitrust law that prohibits price discrimination in commerce.

Dive Insight:

Harris said that a grocery price-gouging ban would help the food industry become more competitive, adding that, if elected president, her administration would support smaller food businesses “that are trying to play by the rules and get ahead.”

“We all know that prices went up during the pandemic when the supply chains shut down and failed, but our supply chains have now improved and prices are still too high. … Many of the big food companies are seeing their highest profits in two decades, and while many grocery chains pass along these savings, others still aren’t,” Harris said.

In July, food-at-home prices rose at a 1.1% annual rate while inflation increased 2.9% — its lowest level on an annual basis since March 2021, according to Consumer Price Index data released Wednesday by the U.S. Bureau of Labor Statistics. Even as grocery inflation has slowed in recent months, consumers have continued to worry about food costs.

Harris pointed to her previous experience as California’s attorney general prosecuting companies for illegal price hikes: “So believe me, as president, I will go after the bad actors.” The grocery price-gouging ban is one of several economic policies, including increased construction of new housing, expanded child tax credits and lowered drug costs, Harris is proposing.

The NGA, which has led a crusade against what the group says are “unfair and discriminatory tactics” by large food retailers and suppliers that hurt independent grocers, criticized Harris’ proposal.

“The proposal calling for a ban on grocery price gouging is a solution in search of a problem,” NGA President and CEO Greg Ferrara said in a statement.

The NGA said that instead of proposing new legislation, the government should more strictly enforce the Robinson-Patman Act, lower swipe fees and “rein in excessive and burdensome regulations.”

Amid numerous news reports last week that Harris would share a proposed grocery price-gouging ban Friday, FMI released a statement Thursday saying there are misconceptions about food price inflation and industry practices.

“It is both inaccurate and irresponsible to conflate an illegal activity like price gouging — a defined legal term in which specific violations of trade practices law occur — with inflation, which is a broad, macroeconomic measure of increases in consumer prices over time,” FMI President and CEO Leslie G. Sarasin said in the statement.

FMI said that food retailers’ profit margins are tight — 1.6% last year — and that the industry has worked to keep prices “as low as possible” while grappling with increased labor costs, volatile energy prices, more severe weather events, more regulations and supply chain issues.

Earlier this year, the Federal Trade Commission released a report claiming that revenues have outpaced costs for food and beverage retailers in recent years, suggesting the grocery industry is using inflation to increase profits at the expense of consumers. The FTC also said that large grocery retailers took steps to shield their market power in the face of supply chain disruptions during the COVID-19 pandemic that put smaller retailers at a competitive disadvantage.

The report used publicly available data and responses the agency ordered in late 2021 from nine grocery companies, including Kroger, Walmart, Amazon and C&S Wholesale Grocers.

A White House analysis published at the start of the year found that grocers have maintained the higher profit margins they saw during the pandemic while other types of retailers, like apparel stores, have seen margins slump.

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Allergen-free formulating brings business benefits

Gluten, eggs and dairy provide bakery formulations an incredible amount of functionality. They are also allergens. About 20 million people in the United States have food allergies, or about 6% of adults and 8% of children, and research has shown that the prevalence of food allergies has increased over the past generation, according to the US Centers for Disease Control. Food manufacturers have experienced an uptick in customers and consumers asking for more allergen-free foods or clear labeling around the safety of food products.

Replacing these ingredients, however, isn’t simple due to their outsized impact on texture, rise, flavor and color of the baked goods that rely on them.

“Removing common allergens such as gluten, eggs or lactose from baked goods and snacks often requires a careful balance of alternative ingredients to maintain both functionality and flavor,” said Jeff Hodges, manager, bakery, snacks and confections applications, ADM. “It’s crucial to understand the role of each ingredient formulators want to replace, which then helps make the proper formulation adjustments to achieve this balance. It takes a holistic approach to reformulation to ensure that the final product meets consumers’ sensory expectations while still addressing dietary requirements.”

While challenging, eliminating allergens can be done, and carries with it some benefits to consumers and the manufacturers. But it takes an all-hands-on-deck approach to formulation.

Taking away highly functional but allergenic ingredients from a bakery formulation is going to be difficult, but it does come with its own rewards. The first is the most obvious.

“The most important benefit is that it offers consumers with allergies more options and can help reduce the risk of fatal allergic reactions among adolescents,” said David Guilfoyle, design manager, bakery, North America, IFF.

While taste is king when it comes to deciding whether a consumer will repeatedly purchase a bakery item or snack, safety is paramount. No amount of taste, texture or marketing will bring a consumer back to the shelf after an allergic reaction. By removing them, bakers and snack manufacturers increase their consumer base and reach those with allergies and dietary restrictions.

“There is a growing demand for specialty foods to meet dietary needs and wellness goals,” Hodges said. “In fact, research shows that 38% of US consumers consider health-oriented criteria when choosing foods and beverages. This includes attributes like nutrient-dense, use of simple, recognizable ingredients and specific claims such as vegan, keto or gluten-free.”

It’s important to note that even though only a small percentage of US adults and children have a food allergy, they don’t exist in a vacuum. Families of individuals with allergies may also be shopping for these products to keep their household safe, depending on the severity of the allergy. And the most common form of food recall: mislabeling of allergens on the product packaging.

“Formulating away from allergens offers additional benefits such as improved food safety due to reduced risk of cross-contamination and the ability to meet stricter regulations regarding allergen labeling and management,” said Sergio Machado, senior director, RD&A, Corbion.

In addition to creating safe alternatives for those with food allergies and their families, bakers can also gain some business benefits when they remove some of these ingredients. Cost is probably the biggest factor. Both dairy and eggs can experience a lot of price volatility.

“Replacing milk protein concentrate with a plant-based protein can in many instances reduce the formulary cost,” Guilfoyle said. “Plus, there is a lot of volatility in using milk proteins, and that is not always the case with plant-based proteins.”

In addition to lowering or stabilizing costs, replacing allergens eases the burden on operations. Troy Boutte, vice president, innovation, AB Mauri North America, pointed out that bakers will be able to reduce cleaning time and the chemicals needed for cleaning, which will ultimately save the equipment from additional wear. They will save on testing costs and optimize production scheduling and warehouse space.

“Allergens have to be segregated in a designated location within the warehouse,” Boutte explained.

“Bakers can gain more flexibility in their production schedules since allergens have to be run at the end of a production run and usually in a certain order.”

The nutritional profile of a baked good can also improve when certain allergens are taken away.

“For example, bakers who remove eggs also remove the saturated fat and cholesterol content associated with eggs,” said Jennifer Stephens, vice president of marketing, Fiberstar. “However, other ingredients with similar functionalities need to be added back.”

Replacing the comprehensive functionality of ingredients like eggs and dairy requires significant knowledge to piece together a solution. In some applications, it can be an uphill battle, but Hodges sees the challenge as something that can create growth in the industry.

“Formulating away from allergens also drives innovation and sustainable growth within the food industry,” he said. “The challenge of creating allergen-free products encourages the development of new ingredients, solutions, processes and products that benefit multiple food categories. By addressing the allergen concerns, companies can foster continuous growth through the introduction of inclusive, allergen-free products that meet evolving market demands.”

Because at the end of the day, safety may be No. 1 but taste reigns supreme.

“Bakers and manufacturers need to be aware that consumers expect free-from baked goods to taste as good, if not better, than their traditional counterpoints, so a functional formulation is key,” said Kathy Lewis, principal scientist, Ardent Mills.

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Unpacking the $35.9bn acquisition of Kellanova by Mars

Poised to become one of the biggest M&A headlines of the year, Mars – one of the world’s largest family-owned businesses – has inked an agreement to acquire Kellanova for $83.50 per share in cash, for a total consideration of $35.9bn.

The purchase of Kellanova is a cornerstone of Mars’ overarching ambition to double its snacking portfolio over the next decade: by expanding into more occasions and more categories. It unites two iconic 100-plus-year-old businesses with complementary footprints and brand portfolios.

“Both businesses are performing well, have outstanding brands, people-focused cultures, complementary portfolios, a commitment to sustainability, a true sense of purpose and a deep history of success over decades,” said Mars in a statement.

“This combination allows both businesses to achieve their full potential and together, we will have an exciting and unique opportunity to meet the needs of billions of consumers with trusted, loved and innovative products and create further opportunity for both businesses to achieve their full potential.”

Revamping the future of snacking

A major player in the confectionery space, Mars has been increasingly focused on diversifying into healthier snack options. The addition of Kellanova’s snack bar business – which includes megabrands like RXBar and NutriGain – will strengthen its presence in the growing market for better-for-you snacks. It reduces the candy maker’s reliance on its traditional confectionery products, which are typically high in sugar and chocolate-heavy, especially important as cocoa prices remain elevated, having reached historical highs in March of nearly $10,000 per metric ton.

Poul Weihrauch

It also gives Mars a stronger foothold in the competitive snack bar space, dominated by major snack players like PepsiCo (Quaker bars) and Mondelez (Clif Bar).

Mars will become a strong contender in the salty snacks sector, able to capitalize on the strong brand equity of Kellanova’s billion-dollar brands – Pringles and Cheez-It – that have established loyal customer bases and outperform category competitors, particularly with Gen Z and Millennial consumers. However, Mars believes there is still ‘untapped potential’ with many of Kellanova’s brands and as such, has ‘no plans at this time to sunset any’ of them.

The diversification will help the Chicago-headquartered company tap into new revenue streams, especially in fast-growing geographies like Latin America. Mars CEO Poul Weihrauch also told the media there is opportunity in places like China and Africa for the two companies to grow together. Mars has a larger footprint in China, while Kellanova is stronger in Africa.

This is reinforced by complementary routes-to-market, supply chains and local operations. The deal also brings together a global workforce with solid R&D capabilities and brand-building experience. By acquiring the well-established snack business, Mars will benefit from economies of scale and potential cost synergies. This could involve integrating supply chains, manufacturing processes and marketing strategies, ultimately leading to improved efficiency and profitability.

The agreement also plays into the CSR commitments of both companies. Kellanova has a long history of social and environmental leadership, and its Better Days Promise initiative complements the Mars Sustainable in a Generation Plan, which is delivering tangible progress in reducing greenhouse gas emissions. According to Mars, once the deal is finalized, Kellanova will become part of the Mars Net Zero commitment and align with the Mars Responsible Marketing code.

“We will honor the heritage and innovation behind Kellanova’s incredible snacking and food brands while combining our respective strengths to deliver more choice and innovation to consumers and customers,” said Weihrauch.

“We have tremendous respect for the storied legacy that Kellanova has built and look forward to welcoming the Kellanova team.”

Transaction details

The $35.9bn price tag includes all of Kellanova’s brands – its portfolio of snacks, international cereal and noodles, North American plant-based foods and frozen breakfast – along with its assets and operations.

The transaction price represents a premium of approximately 44% to Kellanova’s unaffected 30-trading day volume weighted average price and a premium of approximately 33% to Kellanova’s unaffected 52-week high, as of August 2, 2024. The total consideration represents an acquisition multiple of 16.4x LTM adjusted EBITDA, as of June 29, 2024.

Mars intends to finance the purchase through a cash and a debt financing commitment of $29bn from JPMorgan Chase and Citi.

The agreement was unanimously approved by both Mars’ and Kellanova’s Board of Directors. The WK Kellogg Foundation Trust and the Gund Family have also committed to vote in favor of the transaction (shares representing 20.7% of Kellanova’s common stock, as of August 9, 2024).

However, the transaction – which is expected to close in the first half of 2025 – is subject to regulatory approvals. There have been reports of proposed antitrust hurdles, with the US Department of Justice and Federal Trade Commission under the Biden administration aggressively challenging big mergers and acquisitions. Others believe the deal is likely to pass regulatory muster as the two have very few overlapping product lines.

In the case of failure to obtain regulatory approval, Mars will have to pay a termination fee of $1.25bn. Kellanova will have to pay $800m to Mars if there is a change in board recommendation.

The agreement permits Kellanova to declare and pay quarterly dividends consistent with historical practice prior to the closing of the transaction.

Citi and law firm Skadden, Arps, Slate, Meagher & Flom advised Mars. Goldman Sachs and Kirkland & Ellis advised Kellanova, while investment bank Lazard advised Kellanova’s Board of Directors.

What lies ahead

Upon completion of the deal, Kellanova will become part of Mars Snacking, led by global president Andrew Clarke. The combined company will be based in Chicago, although Kellanova’s Battle Creek-headquarters will remain a core location.

“This is an exciting opportunity to create a broader, global snacking business, allowing Kellanova and Mars Snacking to both achieve their full potential,” said Clarke.

“The Kellanova brands significantly expand our Snacking platform, allowing us to even more effectively meet consumer needs and drive profitable business growth. Our complementary portfolios, routes-to-market and R&D capabilities will unleash enhanced consumer-centric innovation to shape the future of responsible snacking.”

Steve Cahillane, Kellanova’s current chairman, president and CEO, said he would leave when the deal closes. Previously chair and CEO of Kellogg Company since 2017, Cahillane steered the conglomerate through a major restructuring that saw it split into two new entities. Kellanova was spun off from cereal-focused WK Kellogg Co. in October 2023, subsequently posting strong earnings and raising its guidance for FY24. Net sales in 2023 topped $13bn.

Kellanova has a presence in 180 markets and approximately 23,000 employees across the globe.

For its part, Mars brings in more than $50bn in annual sales for its household brands like Kind, Snickers, M7M, Dove, Pedigree and Whiskas, among others, and more than 150,000 associates across its Petcare, Snacking and Food businesses.

“Kellanova has been on a transformation journey to become the world’s best snacking company and this opportunity to join Mars enables us to accelerate the realization of our full potential and our vision,” said Cahillane.

“The transaction maximizes shareholder value through an all-cash transaction at an attractive purchase price and creates new and exciting opportunities for our employees, customers and suppliers.

“We are excited for Kellanova’s next chapter as part of Mars, which will bring together both companies’ world-class talent and capabilities and our shared commitment to helping our communities thrive. With a proven track record of successfully and sustainably nurturing and growing acquired businesses, we are confident Mars is a natural home for the Kellanova brands and employees.”

Mars has set up a dedicated website to provide ongoing information about the transaction.

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