The J.M. Smucker Company continued to cull its CPG brand portfolio today with the announcement of an agreement to sell its natural and organic beverage and grains business to venture group Nexus Capital Management in a cash deal valued at around $110 million.
The transaction, coming just weeks after the company offloaded its dry pet food business in a $33 million sale, includes assets and trademark rights to the company’s natural and organic beverage and grains portfolio — R.W. Knudsen and TruRoots, together generating net sales of around $140 million in fiscal year 2021. The deal also includes a licensing agreement for Santa Cruz Organic, producers of nut butters, fruit spreads, syrups and applesauce.
J.M. Smucker is additionally offloading two manufacturing and distribution facilities in California and Maryland to Nexus in the deal, while the company’s Ripon, Wisconsin production plant will also be closed in 2022, according to the release, with manufacturing to be consolidated at its Orrville, Ohio site. The deal comes just weeks after J.M. Smucker announced construction of a new $1.1 billion facility in Alabama, set to go online in 2025, dedicated exclusively to its Uncrustables sandwiches product line.
Launched in 2013, Los Angeles-based Nexus Capital Management invests $20-$150 million per transaction across a wide range of categories and businesses. Its portfolio includes natural and organic beauty and personal care brand Sky Organics and apparel maker Toms.
“This transaction supports our strategy to direct investments and resources toward core brands positioned for growth,” said Tina Floyd, Senior Vice President and General Manager, Consumer Foods at J.M. Smucker Co., in a press release. “By focusing resources on our core brands, including Uncrustables sandwiches, Jif and Smuckers, we are positioning ourselves to build on our market leadership while continuing to support the growth of the overall category.”
Founded in 1961, R.W. Knudsen Family produces nearly 100 types of shelf-stable fruit and vegetable juices, including organic varieties, and other beverages. In 2013, J.M Smucker acquired Livermore, California-based TruRoots, which produces a range of food products including organic and gluten-free pasta, cookies, rice and other grains.
While a relatively small transaction compared to others in the space, J.M. Smucker’s divestment from juice reflects a broader trend that has seen billion-dollar beverage conglomerates like The Coca-Cola Company, PepsiCo and The Campbell Soup Company taking a step back from the category. In turn, each has found willing buyers in private capital groups, which currently control the rights to high-awareness brands like Odwalla, Naked and Bolthouse Farms.
According to IRI data, multi-outlet retail sales of shelf-stable bottled juices rose 4.6% to over $7.8 billion through October 26, 2021.
J.M. Smucker’s core beverage business is coffee, with brands like Dunkin’ (via licensing agreement), Folgers and Cafe Bustelo generating $645.1 million in retail sales in Q2 2021.
In November, the company reported that sales, adjusted for divestitures and currency exchange, rose 8% in Q2, even as higher input costs were passed along to consumers in the form of price hikes.