{New York Times} PepsiCo to Acquire the Fruit and Veggie Snack Maker Bare Foods

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For PepsiCo, the purchase of Bare Foods is its latest effort to diversify its food and beverage portfolio and move toward the more natural, less-processed foods that are now in favor by increasingly health-conscious consumers.

May 25, 2018: Continuing to bet that consumers want to crunch on healthier snack items, the food and beverage giant PepsiCo announced Friday that it was acquiring Bare Foods, a maker of baked fruit and vegetable snacks.

For PepsiCo, which did not make public the financial terms of the deal, the purchase of a company that makes products like salt-and-vinegar beet chips and Granny Smith apple chips is its latest effort to diversify its food and beverage portfolio and move toward the more natural, less-processed foods that are now in favor by an increasingly health-conscious public.

“We have been on a journey of broadening the snack portfolio for many years now,” said Vivek Sankaran, president and chief operating officer for PepsiCo’s Frito-Lay North America unit, noting the brand’s earlier development of Simply Tostitos organic tortilla chips, Simply Organic Doritos and Off the Eaten Path, which makes crispy snacks using vegetables like black beans and green peas. Since 2006, the percentage of revenues coming from healthier food and beverages at PepsiCo has climbed to 50 percent from 38 percent.

The acquisition was one in a string of purchases of healthy snack-food companies by large conglomerates. 

Earlier this year, Campbell Soup, which had already acquired the organic products maker Pacific Foods, closed on its $4.9 billion acquisition of Synder’s-Lance, the maker of Snyder’s of Hanover pretzels and Cape Cod potato chips. Late last year, Hershey announced plans to buy Amplify Snack Brands, the maker of SkinnyPop Popcorn and Paqui tortilla chips, for $1.6 billion, while ConAgra picked up Angie’s Boomchickapop for $250 million and Kellogg’s bought the Chicago Bar Company, maker of the RXBAR protein bar, for $600 million.

In the past four years, snack sales in the United States have jumped more than 12 percent to $145 billion, according to Nielsen Retail Measurement Services. A large portion of that growth has come from consumers seeking out healthy snacks or those that are organic or have so-called clean labels — no artificial flavors, colors, preservatives or sweeteners. Sales of nuts, trail mix, and organic savory snacks in the United States jumped to nearly $9 billion last year from $7.8 billion in 2012, according to Euromonitor International.

As consumers’ appetite for healthy snacks has grown, so has the number of products fighting for a spot in their cabinets. In 2017, a study by Nielsen showed thousands of small manufacturers collectively held 60 percent of the fast-growing clean-label market.

That competition poses a challenge for PepsiCo and other food and beverage conglomerates looking to acquire small manufacturers: picking which healthy snacks will stick around for years or even decades and which ones will wind up being just a fad.

“About eight or 10 years ago, you had a lot of small companies come into the world of snacking,” Mr. Sankaran said. “Many of them didn’t stick. Consumers tend to be fickle and try lots of different things. If something isn’t a powerful concept, it doesn’t last.”

Bare Foods was founded in 2001 by a farming family in Washington that was searching for a way to extend the consumer life of its organic apples. Its founder, Eric Strandberg, partnered with a friend and began slicing and baking the apples. They began offering the baked snacks at Pike Place Market in Seattle and soon discovered they had a hit.

The current chief executive, Santosh Padki, was brought on a couple of years ago to help oversee the company’s expansion.

Today, Bare Snacks are sold across the country in grocery store chains as well as Whole Foods and Target, with Walmart scheduled to come on board soon, Mr. Padki said.

By Julie Creswell for The New York Times