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Being headquartered in the Northwest means we’ve naturally followed the rising fortunes of Sahale Snacks, a venture started in 2003 by two former broadcasters who decided after eating disappointing fare on a Mount Rainier climb that there had to be a better trail mix. They tried avant-garde seasonings before pivoting to a more mainstream spice strategy that still upends convention in the tired mixed-nut category. 

Sahale’s acquisition by J.M. Smucker is more than a cool company named for a favorite hike being bought by a major food player. Sahale was doing beautifully on its own, with prime spots in Costco Wholesale and thousands of other outlets, large and small, and Smucker’s wanted in. Like many smart big-brand companies, it often looks outside for product innovations. 

As The Hartman Group wrote in a recent white paper, “A Recipe for Growth in Packaged Foods,” attracting consumers these days is not about advertising or marketing or having a great brand. It’s about the food, and Sahale Snacks has the flavor side wrapped up: maple pecans, pomegranate pistachios, almonds with cranberries, honey and sea salt. Yum. 

On their own, food conglomerates often produce short-lived hits that do not make up for volume losses elsewhere. The Hartman Group’s research shows that the last decade of top first-year launches in food produced few sustainable businesses, despite eight-figure runs out of the gate. The biggest successes have come from early-stage companies birthed upmarket, like Sahale Snacks. 

This type of acquisition saves Smucker’s the steps of worrying about finding the right target consumers and convincing people to trade up for these treats. Sahale has already done it. The same is true for a host of other brands bought by big food companies — and the trick now is to be patient and adjust growth expectations for a new, food-forward market in which consumers are experimenting and exploring. Today’s growth engines tend to have rapid growth but lower initial gross margins — but the profit stream can grow continuously for 10 to 15 years with less marketing investment than is required for low-single-digit growth for larger cash cow brands. 

As we discuss in the white paper, it’s important that companies investing in hot new equities not let the shadow of an undifferentiated mass-market halo taint those newcomers. It can be complicated, as Unilever is finding with its upmarket Ben and Jerry’s ice cream brand: They are on opposing sides of the GMO labeling issue, but the parent company does not want to hurt a profitable business by squashing its politics — part of why Ben and Jerry’s enjoys such loyal customers. 

But the potential upside is tremendous, and certainly more exciting and more promising than continually trying to burnish older brands with line extensions. It just requires a new way of thinking, one tied to consumers and ingredients and a dramatically shifting food culture.

recipe for growthRead a complimentary copy of the white paper, “A Recipe for Growth in Packaged Foods.”