As reported via company press release, Kraft Heinz has confirmed its intent to purchase Primal Kitchen — maker of paleo condiments, dressings and more — for approximately $200 million USD. The deal is expected to close in early 2019. The acquisition may help prime Kraft Heinz to better compete within the premium market space. It is also a departure from major KHC shareholder 3G Capital’s traditional large-scale deal approach — although certainly $200 million is certainly quite significant.
Hartman Group Insight: Premium brands remain the darling of the food and beverage marketplace, and Hartman analysis puts the average growth of premium over the past 10 years at approximately +10%.* Legacy brand manufacturers long to achieve similar results, but while reinventing legacy brands is possible, buying their way in via the acquisition of scrappy startups seems to be a more travelled route. The question remains — what now? The success of Primal will hinge on how the brand is integrated into the KHC business model and how well consumers react to its acquisition. Further insights from The Hartman Group on premium here
* Year-over-year growth of premium dollar sales; Hartman Analysis — Nutrition Business Journal, Euromonitor, AC Nielsen