Nibbled at some untimely HAIN today. IMO some of the latest food acquisition have come at a high goodwill cost (writedown), as CPB is finding out with Bolthouse & Garden Fresh. Hain's already has some respectable established organic brands with scale for some hypothetical parent with deep pockets. Campbell's already found the need to diversify again. This after things fell apart on their Bolthouse & Garden Fresh acquisition integration debacle. Personally I like the depressed food group a lot better than I liked the retail store group when they hit the dog house. Why, food is a necessity and lot closer to home than unnecessary discretionary items. It has been said recently big food producers are loosing their pricing power. One way to combat this is through consolidation. On the other hand. Amazon IMO could eventually add or keep hypothetically buying established Brand names such as HAIN or Campbells brands or others and deal with the blowback with Walmart and others? With Pepsi by far the biggest and most profitable snack company. What are they doing? IMO Coke has to be thinking down the road also. Will they venture away from drinks? The established food companies with scale also must be thinking the same. RE- Oligopoly-Chemicals Dow-Dupont- Monsanto- Bayer. IMO The Food business looks like an up and coming eventual oligopoly business. IMO the group will look a lot better if trucking prices come down. I think later this year fuel costs will come down. This because American Oil companies will be pumping. Natural Gas could also be making inroads into trucking. The insurance policy is ANWR. It's there and now partly available. IMO Prices would have to be compelling for a long time for development. With the exception of exploratory measures. I don't think it will have to be used any time soon.
BGS - HAIN - Speculation aspects - CAG had good earnings today. They sold their private label brands to Treehouse. The deal to sell it Wesson oil business is off due to regulatory concerns. I was used to remembering the talk of Private labels generally thriving in a recession environment. I think the economy is doing much better now a days. IMO meaning Brand names will see slower declines in historical traditional branded space and can withstand price increases better. I see companies using existing brand name awareness by creating or extending offshoot lines. This by way of healthier,organically,and strategically packaged lines geared for better for consumer tastes of today. IMO- A good earnings report today just might mean CAG is ready for a bigger acquisition? BGS & HAIN IMO BGS needs a bigger parent to compete better. IMO HAIN's itself has a good line of brands for newer consumers taste. The fact that GIS was willing to pay a big goodwill price (8 billion for a 1.3 billion business) for diversification. IMO Shows food companies are willing to make big moves for growth. Privately held Mars also made a big acquisition in the pet space. It's $9.1 billion acquisition of pet care company VCA. I also think wev'e got to the point now bigger food companies with want to fold in some of the acquisitions made by some of the smaller companies made to grow themselves faster. Pirate's Booty/Back to Nature Foods Company by BGS are examples.
P.S.
Costs are rising in the group and customers are trying to keep costs down. IMO Consolidation is one way to combat pressures from customers. I can't help but see some synergies here.
CAG snips> The Refrigerated & Frozen segment continued its growth momentum in the third quarter with 3.2% net sales growth.
>Volume declined 4%, driven by retailer inventory reductions, which were higher than anticipated, and deliberate actions to optimize distribution on certain lower-margin products, consistent with the Company's value over volume strategy. Price/mix declined 2% as the Company increased its investments with retail customers to drive brand saliency, enhanced distribution, and consumer trial. The acquisitions of the Duke's, BIGS, and Angie's BOOMCHICKAPOP businesses added approximately 500 basis points to the net sales growth rate.
BGS snip>Net sales growth was primarily driven by our three most recent acquisitions, all of which performed better than expected, as well as strong growth in Green Giant frozen and Pirate Brands |
