Hershey pounces for two US pretzel firms
US confectionery major Hershey has snapped up two domestic suppliers of pretzels – Dot’s Homestyle Pretzels and Pretzels Inc. – for a combined US$1.2bn.
The Hershey and Reese’s chocolate owner has been steadily broadening the range of snacks it sells, with deals in recent years for companies marketing savoury snacks and low-sugar confectionery.
Dot’s Homestyle Pretzels was set up in 2011 in North Dakota by founder Dot Henke. Hershey said it is buying four “pretzel-seasoning facilities” from Dot’s.
“As the fastest growing US pretzel brand, Dot’s Pretzels would further accelerate our success in the permissible salty snack category,” Hershey president and CEO Michele Buck said. “Dot’s Pretzels stand apart from all other products in the pretzel category and represents 55% of the pretzel category’s growth during the past year.”
Indiana-based Pretzels Inc., founded in 1978, has been owned since 2018 by US private-equity firm Peak Rock Capital. It is a co-manufacturer for Dot’s Pretzels. The company has three factories across Indiana and Kansas. Hershey said buying the business would give it “deep pretzel category and product expertise and the manufacturing capabilities” to support Dot’s growth.
Buck added: “Pretzels Inc. will help us expand Hershey’s snacking and production capabilities while keeping the special connection to Dot’s. It will be important as we continue to grow this already fast-growing brand and create new products in the broader pretzel category.”
In May, Hershey snapped up US lower-sugar confectionery supplier Lily’s Sweets for an undisclosed sum.
The chocolate maker made its first significant move into savoury snacks in 2017 when it bought US business Amplify Snack Brands for US$1.6bn. Among Amplify’s assets was UK crisps business Tyrrells, which Hershey sold in 2018 to Germany’s Intersnack.
Later that year, the company bought another US snacks business, Pirate Brands, from B&G Foods for $420m.
Maple Leaf reviews plant-based operations on heels of Beyond Meat downgrade
Maple Leaf Foods, the Canada-based meat group, is reviewing its plant-protein business after a third quarter of declining sales.
“We are seeing a marked slowdown in the plant-based protein category performance, which may suggest systemic change in the extremely high growth rates expected by the industry,” Michael McCain, the president and CEO of the Canadian meat and animal-free business, said in today’s (4 November) results filing.
Meat-free sales, which include the Field Roast and Lightlife brands, fell 6.6% in the quarter ended 30 September to CAD48m (US$38.6m), led by declining volumes in retail, offset by “growth” in foodservice. In contrast, regular proteins grew 13.4% to CAD1.15bn. Sales in the plant-based category were down 20.7% in the previous three months and 8.1% in the opening period of the fiscal year.
Maple Leaf set up its Greenleaf unit in 2018 to house the plant-based brands – both acquired through M&A in 2017 – and at the start of this year said it would invest US$100m to purchase a dedicated plant in the US state of Indianapolis. However, in March, the company announced it would relaunch Field Roast and Lightlife after sales were 10.5% below target in fiscal 2020, despite a 19.5% increase to CAD210.8m.
McCain said today: “While our overall focus to create long-term value for all stakeholders remains unchanged, and investments to date have been well calculated, well executed and have delivered underlying value, we have always been prepared to re-examine that investment thesis if circumstances change. Given current category performance, such a review is underway which will either affirm or adjust our strategies and investment thesis going forward.”
Two weeks ago, California-based Beyond Meat announced its sales were struggling as it downgraded its third-quarter revenue outlook to $106m, from a $120m-$140m range.
While the Beyond Burger and Beyond Sausage maker partly blamed Covid-19 for the revision, it said “demand was impacted by broader on-going macro and micro-economic factors”, including pressures in Canada.
“The company also experienced a decrease in retail orders that persisted longer-than-expected from a Canadian distributor coinciding with the re-opening of restaurants, expected incremental orders that did not materialise from a change in a distributor servicing one of the company’s large customers, observed delays in distribution expansion and shelf resets believed to be driven by customer labour shortages, and incurred shortfalls at certain US foodservice customers believed to be driven by the effects of the Covid-19 Delta variant,” Beyond Meat explained.
Maple Leaf’s year-to-date plant-based sales were down 12.4% at CAD138.6m amid “pricing action implemented at the end of the third quarter of 2020 to mitigate inflation and structural cost increases”.
It added in the commentary: “Driven largely by the lower-than-expected growth in the plant-protein category, the company does not expect to meet its Plant Protein Group sales-growth target for the second half of 2021 and will not likely have a further view on near-term sales growth targets until it has completed its reassessment of the category.”
Sales for Maple Leaf as a whole rose 12.4% in the quarter to CAD1.2bn, and were up 7.1% for the year so far at CAD3.4bn.
Third-quarter adjusted operating income increased 84.3% to CAD68m, and was 17.5% higher year-to-date at CAD174.7m.
The business posted net income of CAD44.5m, down 32.6%, but up 14.8% over the nine months at CAD100.9m.
Huon Aquaculture shareholders vote in favour of JBS takeover
Huon Aquaculture shareholders have delivered a majority vote in support of the takeover of the Australian seafood firm by Brazilian meat giant JBS.
JBS had put forward two offers for Huon, both worth AUD3.85 (US$2.88 today) a share. One via a scheme of arrangement and the second in an off-market bid, with a minimum acceptance condition of 50.1%. Both have now been cleared by shareholders.
In a notice to the Australian Securities Exchange on Friday (29 October), Huon said a final decision will now be made by the Federal Court of Australia in Melbourne this Wednesday. Australia’s Foreign Investment Review Board (FIRB) had cleared the deal late in October, putting the final decision in the hands of shareholders and the courts.
Both schemes secured the backing of around 90% of Tasmania-based Huon shareholders on Friday.
Andrew Forrest, the owner of the Tattarang Agrifood investment vehicle, had previously sought to block the transaction by increasing the shareholding in Huon to 18.5%.
Forrest had instructed the FIRB, which approves foreign investment transactions, to review JBS’s proposed deal. He had also urged JBS and Huon to commit to better standards in environmental and animal husbandry practices – including in the Brazil-based behemoth’s meat-processing operations.
Huon chairman Neil Kearney said in Friday’s stock-exchange filing: “We are delighted that shareholders have endorsed the proposed transaction and we look forward to working closely with JBS on the ownership transition. Today’s overwhelming shareholder support for the JBS transaction will secure the future of Huon.”
In a letter addressed to Huon shareholders posted on the Australian Securities Exchange yesterday (31 October), JBS said it “reconfirms its unequivocal commitment to animal welfare and environmental sustainability. We also take this opportunity to confirm that JBS SA unequivocally supports the principle of ‘no pain, no fear’ animal welfare across its global operations”.
Mushroom mania – the vegetable’s rise in packaged food
The use of mushrooms in packaged food is growing with products sprouting up across categories. Victor Martino digs further into their use and explores their potential.
Mushrooms and their parent fungi are shaking up food ingredients, sprouting up as the primary ingredient in a myriad of products across numerous categories, ranging from shelf-stable packaged food and drink, to refrigerated alternative meats and dairy.
Technology also is playing a major role in the “shroom-boom”. For example, a host of innovative fungi-based (fungi includes mushrooms, yeast and molds, while mushrooms are the fleshy above-ground part of the fungus) start-ups like Atlast Food Co. and MycoTechnology are producing mycoprotein, using it as the protein source or primary ingredient to create animal-free meats and dairy products. Mycoprotein is produced from mycelium, the root-like threads of fungi that live below the ground.
US food and beverage ingredient and product development firm Mattson, which works with ingredient and consumer packaged goods companies, calls mushrooms a major emerging food-ingredient trend.
“There’s an opening for new options to the usual plant-based [ingredient] suspects. Mushrooms are coming to the rescue, with companies like MyCoTechnology, Meati Foods and Atlast Food Co. making functional ingredients from both the mushroom and the mycelium,” Mattson executive vice president Barb Stuckey says.
Springing up across categories
Kroger Co., one of the largest grocers in the US, included “mushroom mania” as one of its “top seven food trend predictions” for 2021. This recognition by a major food retailer, which also sells billions of dollars a year of its own-brand packaged foods products, is helping to spur the proliferation of new fungi-centric food and beverage products.
“2021 will be a breakout year for mushrooms,” Kroger said when it announced its predictions list. “The versatile vegetable is rich in antioxidants, vitamins and minerals, and can easily elevate everyday recipes with its warm umami flavor. Consumers should expect to see mushrooms play a starring role in a variety of new products in 2021, including blended plant-based proteins, condiments, spices, seasonings and more.”
Kroger has launched numerous mushroom-based products in various categories under its private-label brands, including a line of quick-cook mushroom risotto, organic mushroom umami herb seasoning rub, beef and mushroom blended meat patties and a grilled mushroom and truffle oil thin-crust pizza, as well as others, Stuart Aitken, the retailer’s chief merchant and marketing officer, says.
According to a May 2021 research report from Grandview Research, the global mushroom market, which includes packaged food and drink products made from mushrooms, is expected to reach US$95.24bn by 2027, expanding at a healthy CAGR of 9.5% over the forecast period.
Mushrooms are also riding the growing interest in functional and adaptogenic foods, which has been accelerated by the pandemic as consumers seek out more products said to have health, wellness and immunity benefits. The ingredients are being rapidly incorporated into stress-reducing food and beverage products, according to a recent report from Allied Market Research. This growth is evident on grocery store shelves and online stores where innovative food and beverage products made with mushrooms are literally sprouting up across numerous product categories.
For example (and this is a small slice of the new product development that’s happening in 2021), in the tea category there’s Republic of Tea Beauty Brain Tea, made with lion’s mane mushrooms and ginkgo biloba; Pan’s Mushroom jerky, which is made with shiitake mushrooms and has a texture that’s very similar to beef; B.T.R. Bar Peanut Butter Chocolate Chip Bliss Bars, made with reishi mushrooms and pumpkin seed protein; Tessemae’s Mushroom Ginger Immunity vinaigrette, made with lion’s mane mushrooms; Nature’s Fynd fungi-based cream cheese; and Atlast Bacon, an animal-free bacon alternative made from mushrooms.
Additionally, non-alcoholic beverages (coffee is a big one), including many that blur the line between a drink and a food, as well as functional and adaptogenic mushroom-based protein powders, are booming categories in the mushroom-based product space.
Mark Gallo, a California-based CPG industry veteran and angel investor, says he expects the mushroom-based food and drink trend to continue to grow.
“It’s all about consumer experimentation, which we’re in the era of, and the growing popularity of functional foods and beverages,” Gallo says. “It’s a healthy category. People like mushrooms – they’re nature’s medicine – so now they’re going to experiment with and buy and eat products made from mushrooms, particularly those that include other good ingredients added to enhance taste.”
Mushroom tech
The use of mushrooms as a key ingredient in packaged food and drink products is the first wave of mushroom mania in the food industry.
The next wave, which is being led primarily by a handful of technology-based startups like Sweden’s Mycorena and US-based Atlast Food Co. is the focus on the use of fermentation technology to transform fungi into an alternative protein to create animal-free meat and dairy products. Fungi are not plants. They have their own distinctive classification.
By fermenting the root-like spores of specific mushroom species, these fungi-focused startups are producing a protein-rich and primarily flavourless food ingredient called mycoprotein.
Fermented fungi proteins aren’t brand new. UK company Quorn Foods has been producing alternative-meat products using the process since the 1980s. But the company’s patents have expired, which has opened the door for start-ups to adopt and tweak the technology, and enter the fungi-based food ingredient and branded consumer products space.
Atlast Food Co. (a fungi-based bacon called MyBacon) and Nature’s Fynd (meatless breakfast patties and dairy-free cream cheese) have both launched consumer packaged food brands and products. Meanwhile, MycoTechnology is focused on the B2B market, producing mushroom mycelium-based ingredients at scale for use as an alternative to animal protein, a sugar substitute and other uses, for branded food companies. All three companies have as their overall mission to establish fungi as a major food ingredient, including as an alternative to plant-based and cultured meats.
Investors taking notice
Nature’s Fynd recently raised US$350m in a Series C investment round, more than tripling the funding it’s received to date. The US company is selling its products directly to consumers online and, last month, via independent US grocer Berkeley Bowl. Atlast Food Co., which received a fresh $40m investment round in April, is also on the move.
“This investment will allow us to meet the incredible demand we’ve felt for our product,” Atlast Food Co. president Stephen Lomnes said when the funding was announced. “We are building the largest mycelium production facility in the US to provide consumers nationwide with a tastier alternative to their favourite animal proteins.”
MycoTechnology is going big and moving beyond using mycoprotein for alternative meats. It’s also turning fungi into a flavor enhancer that blocks taste receptors on the human tongue, masking the bitter taste often associated with some plant-based proteins. It’s CEO, Alan Hahn, said in a recent statement: “We’re focusing on driving sugar, salt and fat out of foods.”
The use of mushrooms as a primary ingredient in packaged food and drink products and as the protein source for alternative meat and dairy products is in its early stage but it’s a trend with staying power.
For example, Amazon-owned Whole Foods Market, like Kroger, named mushrooms as one of its top ten food trends for 2021 and the grocery chain’s buyers are adding mushroom-based food and drink products in numerous categories.
CPG industry veteran and investor Gallo sees a bright future and continued growth for mushroom-based food and drink products.
“Consumers are exploring new ground in food and beverage and mushrooms and mushroom-based food and drink products fit right into this exploration,” he says.
“For example, performance-based and relaxation-based foods and beverages, along with alternative meat and dairy products that taste good, are in high demand and mushrooms fit this demand nicely as an ingredient. Functional foods and beverages. Adaptogens. Personalisation. Mushroom-based products fit right into these areas, which are only going to grow.”
Agriculture. Animal welfare, a major issue for livestock farming
Animal welfare has become a key issue in agriculture and a challenge for the health of everyone and for farmers. How can animal welfare and farmer welfare be combined? How can we combine animal welfare and profitability? Explanations.
5 criteria that define well-being
What is animal welfare? It is based on the so-called '5 freedoms' which were set out by the Farm Animal Welfare Council in 1979 and are included in the World Organisation for Animal Health (OIE) definition of animal welfare. They are now the benchmark for animal welfare: freedom from hunger and thirst, freedom from discomfort, freedom from pain, injury and disease, freedom to express the natural behaviours of the species and freedom from fear and distress. "According to Anses, "The well-being of an animal is the positive mental and physical state linked to the satisfaction of its physiological and behavioural needs and expectations", explains Marylise Le Guénic, who is in charge of animal health and welfare for the (dairy) cattle industry at the Brittany Chamber of Agriculture. To determine this well-being, it is necessary to check that the animals are in good shape, that they have enough water and food, the possibility of exercising, etc. This mission is, of course, the responsibility of the breeder. Treating animals well is a necessity for the farmer "to have good production", continues Marylise Le Guénic.
The need to treat animals well
This kind of care goes hand in hand with the welfare of the breeder. According to the American researcher and epidemiologist David W. Fraiser, you can't do one without the other. "You can't have animal welfare with people who aren't well, just as you can't have farmers who feel good about themselves with animals who aren't well. That doesn't work either," she continues. “The farming system means that the two concepts go together and cannot be separated".
Agricultural sectors committed to improving animal husbandry practices
An idea shared by Yannick Ramonet, who is in charge of the pig industry at the Brittany Chamber of Agriculture. "For better performance, the herd must not be stressed. The work on animal welfare is done in conjunction with the farmer's welfare".
In practical terms, how can animal welfare be improved? "We can note, for example, the creation of liberty boxes (birth space for piglets) in the maternity facilities where the sows are no longer blocked as was traditionally the case. Farmers are pioneers in these matters. Of course, there are regulations, but farmers are creating their own standards and becoming more organised. We are seeing progress through the construction of brighter buildings, for example, the introduction of connected tools for warnings and monitoring, and technologies that are being developed to detect diseases better," he explains. "There is a real movement emerging".
In the poultry industry, too, things are moving forward, according to Félicie Aulanier, head of animal welfare studies at the Brittany Chamber of Agriculture. "For example, it is compulsory to provide perches for laying hens. In addition to the regulations, some breeders use enrichment to meet the animals' needs, such as pitting blocks or bales of alfalfa”. The end of cage rearing for laying hens and the end of the culling of male chicks are also major steps forward in terms of animal welfare. "In the meat sector, there have also been clear improvements, for example in the control of the environment in buildings (temperature, humidity, etc.) and the quality of bedding, thanks to the development of management tools and the work of breeders", she continues.
Common bases, charters of good practice
"The basis of the breeder's profession is good treatment, continues Marylise Le Guénic. "New specifications are often proposed by the sectors themselves, driven by consumer demand". The creation of common bases, charters and guides to good practice, local initiatives, the creation of assessment tools, the commitment of sector plans, etc. are all elements that show the involvement of farmers in animal welfare.
Find the whole e-dossier on the world of livestock on the move, by clicking here
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