Clearly Canadian emerging as acquisition candidate pushing organic grocery frontier
- January 01, 2008
||letter of intent signed, August 2008;
||Crofters Food Ltd (USA), leading north American organic jams and spreads producer;
||Clearly Canadian Brands Inc., leading domestic organic baby food and snacks producer;
||private shareholders of Crofters;
||to build leading organic food portfolio in north America;
||CC is an alternative beverages company that diversified into organic food in 2007.
Organic food is getting hotter in M&A terms, at least in the US. This deal comes just one month after Campbell Soup acquired Wolfgang Puck, a leading premium and organic wet soups brand in the US. Since its turnaround in 2007, Clearly Canadianâs strategy has been to build a diverse organics portfolio, to complement its enhanced and flavoured waters business, and to build distribution coverage and listings with retail chains. Crofterâs is the groups third organic acquisition in just over a year and, if the strategy succeeds in moving organic out of niche and into mainstream, then CC might be a very interesting acquisition candidate for you as early as 2009.
A public company, established in 1988, CC languished for many years as a small player in the alternative âhealthierâ beverages market in Canada. However, a turnaround in 2007 brought in fresh management talent, new funding and a strategy to grow and diversify through acquisitions. First purchased was DMR Foods, Canadaâs leading seller of organic fruit & nuts, in a move which sought to replicate the Pepsico model of combining soft beverages with snacking. A few months later, CC acquired My Organic Baby, which claims to provide Canadaâs only full line of organic baby food; this clearly diversified the group in the direction of Nestle and Heinz, in terms of exit opportunities.
Crofterâs Organics, being a jams and spreads producer, may not have the appeal of beverages, snacks and baby food, but it serves to double CCâs turnover, to a forecast $ 30 mln in 2009; it also enhances the groupâs ability to gain listings in more retail chains, which is critical to the success of a small player in emerging categories.
It may all sound quite small scale, but one is constantly hearing of â25% CAGRâ growth rates for organics businesses in the US, and Campbellâs acquisition in soups shows that the categoryâs entering the radar screens of the big food players. As the CEO of CC said in relation to the Crofterâs deal, âthereâs a short window of opportunity while this emerging market sector transforms from small entrepreneurs to major food conglomeratesâ. Start looking for candidates.