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Smuckers, Hostess deal latest food industry mega merger

The J.M. Smucker Co. is to acquire fellow American snack company Hostess Brands for approximately $5.6 billion, following several other high-profile mergers in food and snacks so far in 2023.

Primarily found in North America, Kansas-based Hostess has sold an iconic line of sweet baked goods since 1930, including Twinkies, DingDongs, Donettes, and HoHos, as well as the Voortman cookie brand. In addition to the snack brands, Smuckers will acquire Hostess manufacturing and distribution facilities in Kansas, Illinois, Georgia, Indiana, Arkansas and Ontario, and approximately 3,000 employees.

Smuckers said that both companies have “complementary capabilities” that will help drive growth and innovation, and that the acquisition positions Smuckers to “deliver on consumer needs across occasions with greater convenience and selection.”

The deal includes about $900 million of debt and is expected to close by the end of the third quarter of Smucker’s fiscal year in April 2024.

Smuckers snaps up sweet convenience

Based in Ohio, Smuckers is known for its namesake Smuckers jams, jellies and Uncrustable sandwiches, as well as peanut butter brand Jif, coffee brands Cafe Bustelo and Folgers and pet food brands Meow Mix and Milk-Bone.

“With this acquisition, we are adding an iconic sweet snacking platform; enhancing our ability to deliver brands consumers love and convenient solutions they desire; and leveraging the attributes Hostess Brands offers, including its strong convenience store distribution and leading innovation pipeline, combined with our strong commercial organisation and consistent retail execution across channels to drive continued growth,” said Mark Smucker, chair of the board, president and CEO of J.M. Smucker Co.

It was first reported in August 2023 that Hostess was considering a sale and looking for a potential buyer. General Mills, Mondelez International, PepsiCo, and Hershey Co. all allegedly showed an interest in acquiring Hostess before the deal with Smuckers was announced in early September.

“We believe this is the right partnership to accelerate growth and create meaningful value for consumers, customers, and shareholders. Our companies share highly complementary go-to market strategies, and we are very similar in our core business principles and operations,” said Andy Callahan, president and CEO of Hostess Brands.

“Above all else, Hostess Brands and The J.M. Smucker Co. share a deep commitment to inspiring moments of joy and satisfaction through our products, and we look forward to continuing to do so as part of The J.M. Smucker Co. family.”

A summer of mergers in food

Post-pandemic, the food industry is still adjusting to a changed consumer landscape. People are snacking more frequently, they are often snacking healthier, they are resisting inflation-driven price hikes, and they tend to shop online for convenience.

This has required many legacy food and beverage brands to rethink their products, customer demographics and marketing strategies. And in some cases, they are choosing mergers and acquisitions to grow.

Campbell Soup Company announced in August that it will purchase Sovos Brands, known for pasta sauce brand Rao’s Homemade and yoghurt brand Noosa, for $2.7 billion, adding “a high-growth, market-leading premium portfolio of brands to diversify and enhance Campbell’s Meals & Beverages division,” Campbell said.

In June, Unilever revealed its deal to acquire premium frozen yoghurt brand Yasso, adding to its portfolio of desserts including Ben & Jerry’s, Magnum and Talenti. Mars also purchased healthy meal company Kevin’s Natural Foods in July, hoping it will “play a key role in Mars Food & Nutrition’s ongoing journey to enable delicious, healthier eating to be part of consumers’ daily lives.”