Post Holdings Inc., the cereal maker behind Fruity Pebbles, Grape Nuts, and Honey Bunches of Oats, among others, now has 180 million reasons to start developing those kinds of products, because that’s how much the company paid for Premier Nutrition Corp., the company that makes functional beverages Joint Juice and Premier Protein shakes, among other products. Premier Nutrition is expected to add about $130 to $140 million in annual revenue, according to Post.
The St. Louis-based cereal maker is leaving existing CEO David Ritterbush in place. Ritterbush, a Red Bull veteran who helped the glucosamine drink maker Joint Juice acquire Premier Nutrition in 2011, and then turn around and rename itself after the protein supplement maker, will continue to run PNC from California.
“We are excited to enter this high growth and dynamic category,” said Bill Stiritz, Post Chairman and Chief Executive Officer. “We could not be more impressed with the terrific quality of the Premier team Dave has put together.”
D2•Fruit 66 Sold to Sun Orchard
Two years of 100 percent growth can be a boon to some companies, but for Fruit 66, it became a pain in the neck – especially as out-of-stocks started to cost the company sales.
That’s why, after searching for investors for a cash infusion, Hargis said he and his investors eventually settled on what he called a strategically-aligned decision to sell Fruit 66 to Tempe, Ariz.-based Sun Orchard. The juice maker, which has deep roots in supplying food service operations like hotels and schools with private-label juices, juice drinks and mixers, calls itself “America’s Independent Micro-Juicery.”
The sale, which will allow Hargis and his sales team to remain on the job via a new company, 1Epic LLC, will result in the movement of most of Fruit 66s back office operations to Sun Orchard.
Fruit 66 launched Epic, a line of carbonated 100 percent juice drinks designed for school vending machines, last year. They’ve come to replace the 75 percent juice sparklers that comprised the original Fruit 66 line. Another non-carbonated 100 percent juice line is sold to schools for cafeteria distribution.
The brand is working on restructuring its co-packing operation to accommodate growth and its new ownership, Hargis said. Currently, the brand is co-packed in Wisconsin, Memphis, and Portland, Ore.
Sale terms were not disclosed.
D3•Mix1 Assets Sold
Hershey’s wiped the company off its books in December, but the assets of dearly departed meal-replacement beverage Mix1 apparently found their way to Phoenix, where they were recently sold to a publicly traded company.
Securities and Exchange Commission documents show that on July 5, PDK Energy bought the assets of Mix1 for $120,000 and 2.5 million shares of stock. PDK is a Mississippi-based public company formed for the purpose of “developing, marketing and distributing unique beverage brands for the youth and energy drink markets,” according to financial statements.
PDK is run by Cameron Robb, according to company filings. Robb, who did not return calls, has 25 years of experience as an entrepreneur, according to the filings, including work with a variety of sports licensing businesses.
The Mix1 brand name, internet domains, product specs and formulas, as well as ingredient mixes and vendor lists were included in the deal.
Mix1 LLC, a private company registered in Phoenix, Ariz., was listed as the owner of the assets.
Last December, candy company Hershey’s shut the doors on Mix1 rather than complete its acquisition of the company. At the time, the company owned a majority stake in the brand but its board decided the once-promising line had failed to meet expectations. Hershey’s invested $12 million in the brand, which faced a recall of 18,000 cases in 2012 and a major brand redesign.
John Grdina is listed as the signatory on behalf of Mix1.
Duvel Moortgat Planning to Buy U.S. Craft Breweries
Over the years, Duvel Moortgat has grown through international acquisition.
In the last 10 years alone, the company has bought Brewery Ommegang, Brasserie d’Achouffe, Brouwerij Liefmans and Brouwerij De Koninck.
Now, however, the Belgium-based brewing company is looking to strengthen its position in the U.S. craft beer market by purchasing other American breweries.
“We would like to acquire two or three U.S. craft breweries over the next five years,” Simon Thorpe, the president and CEO of Duvel USA and Brewery Ommegang told Brewbound.com. “We’re looking to the U.S. to be the engine of our group growth over the next 10 to 20 years. Part of that will be achieved by growing the Ommegang and Duvel brands but part of it will also come by finding other breweries that fit our portfolio.”
As a group, Duvel Moortgat produces and sells about 700,000 hectoliters (about 637,000 barrels) of beer annually, but less than 70,000 hectoliters were sold in the U.S. last year. Thorpe said the company would like to grow that to 500,000 hectoliters over the next decade.
“We view ourselves as a craft brewer that happens to be based in Europe and has a brewery in the U.S.,” he said. “We want to build our existing business, but we are also looking at how we can make a U.S. business that is 500,000 hectoliters and complements the volume we have in Europe. Some of that will come from Ommegang, Duvel and acquisitions.”
Thorpe said he started with a list of 300 potential acquisition targets, then narrowed it to a group of 50, about 10 of which are “very interesting,” he said.
Duvel is looking for craft breweries that have a long growth runway, he said.
“Can they provide leverage for our brands or have they got the potential to scale,” asked Thorpe. “They need to be worthwhile. We wouldn’t go buy a brewery that is 2,000 barrels unless it has some sort of special technology.”
Duvel will also be looking to strengthen its geographic position, as well, Thorpe said. With its home brewery in New York, the company could benefit by adding a brand on the West Coast, where its wholesale relationships aren’t quite as strong.
“We know that we have very good relationships with our wholesalers and retailers in a line upwards from Atlanta through Maine,” he said. “So we’re looking at acquisitions from two directions. Can we help someone grow in the Northeast and is there supply chain leverage on the West Coast that can strengthen our position?”
Thorpe maintains that Duvel isn’t looking to consolidate brands in an effort to achieve cost-side synergies. Instead, the company is looking to maintain the integrity of its acquired brands and aims for revenue growth.
“When we approach acquisitions, we look at it as an ongoing business,” he said. “We are looking to develop the business, alongside the others we already own, over the long term. That might mean looking at a brand that is only distributed in 9 or 12 states and asking if we can help build that out to be national.”
Duvel is looking for breweries that complement the company’s existing image as a portfolio of luxury brands, he said.
“We are not interested in brands where margins and pricing is low,” Thorpe said. “We are only interested in the luxury end of the market. We are looking for premium, high-end, beautiful brands. We believe that over time, if the quality is good, you will survive.”
Thorpe counts Duvel Moortgat among the few “strategic buyers” that are looking to develop businesses over a long period of time and are willing to pay higher premiums to do so.
“A strategic investor in this market will pay between 8 and 14 times EBITDA,” said Thorpe. “A financial buyer might only pay 6 or 8 times. They are looking for a much quicker investment.”
Large beer conglomerates like Anheuser-Busch InBev and MillerCoors would be among those financial investors looking to make a faster return and they’ve already demonstrated their interest in craft through acquisitions likeGoose Island and Crispin Cider, respectively. But what makes Duvel Moortgat a more attractive option, in Thorpe’s eyes, is its commitment to maintaining the provenance and pre-existing structure at any craft brewery it would acquire.
“Duvel [Moortgat] already owns seven breweries,” he said. “We don’t squash them altogether. “The Chouffe brewery still exists; we’ve just made it bigger, stronger and faster. Fundamentally, this is something we believe in. It is important for the branding and how consumers perceive the brand.”
Thorpe said he’s had a number of informal discussions with U.S. craft brewers and he expects many of them to finalize deals with either Duvel Moortgat or other private equity and financial buyers.
Strike Two for Mike
The opinion of a New York State appeals court mirrored what many denizens have muttered to themselves since Mayor Michael Bloomberg first hatched his soda ban efforts: too much power.
A state appeals court recently rejected Bloomberg’s proposed ban, which would have limited the sale of beverages with more than 25 calories per 8 oz. serving in package sizes larger than 16 oz. The court ruled that the law would have “violated the state principle of separation of powers.”
The decision, which was unanimous from a four-judge panel, upheld a March ruling by New York’s State Supreme Court that also blocked the city’s proposed ban. The decision found that New York City’s Board of Health had stepped beyond its power to regulate public health and inappropriately supplanted the policy-making role of the legislature.
The ruling also exposed some of the loopholes from the proposed ban, which would have left unaffected groceries and other businesses not under the watch of the city’s health department and certain beverages, such as milk-based products.
“The expectations did not…reflect the agency’s charge to protect public healthy but instead reflected the agency’s own policy decisions regarding balancing the relative importance of protecting public health with ensuring the economic viability of certain industries,” Justice Dianne Renwick wrote for the court.
In response to the decision, Bloomberg released a statement saying that more than 2,000 New Yorkers have died from the effects of diabetes since the court’s block in March.
“Today’s decision is a temporary setback, and we plan to appeal this decision as we continue the fight against the obesity epidemic,” Bloomberg said in the statement.
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