The US snacks giant has added another healthier snacks business to its portfolio and, writes Dean Best, although these types of acquisitions tend to be of smaller brands, Mondelez is right to react to evolving consumer trends through M&A.

Eighteen months after buying a minority stake in Hu Master Holdings, Mondelez International, one of the world’s largest snacks makers, has bought the fledgling US firm outright.

Hu markets vegan and paleo-friendly chocolate bars and has become, Mondelez says, “one of the fastest-growing confectionery brands” sold in the natural retail channel in the US.

The Albany-based business has just started building the distribution of its products – which now also include grain-free crackers – into more mainstream outlets and, under the wing of a business that’s already a major player areas like chocolate and crackers, stands a solid chance of carving out a foothold in the competitive US grocery market.

For Mondelez, the deal for Hu is another example of the Cadbury owner’s quest to offer a range of products to consumers looking for healthier snack options.

Demand for indulgent treats remains strong. Consumers have sought comfort in chocolate and biscuits during Covid-19. Big brands have also benefited from Covid-19 lockdowns and the shift to most of the food we eat being bought through retail stores.

However, a long-lasting effect of the pandemic is likely to be that the already growing consumer interest in the links between diet and health will accelerate and intensify – and snacks will be no exception.

The move for Hu is not Mondelez’s first in the area. Last year, the Oreo maker snapped up a majority stake in Perfect Snacks, a US producer of chilled nutrition bars.

Expect more to come. Mondelez will continue to work on launching its own products but M&A will be a key part of its toolkit. In many ways, acquiring a business that already has a client base and has built a presence in the market is easier than developing your own. And, like with Hu, first buying a minority position in a business before a full acquisition can reduce some of the risk of an immediate outright purchase.

Mondelez looks likely to have the firepower. CFO Luca Zamarella said last September the company could look to continue to sell down its stakes in coffee businesses JDE Peet's and Keurig Dr Pepper to fund purchases. "The idea we have is to convert those coffee stakes into more snacking platforms and acquisitions," Zamarella said.

Approached by just-food at the time to confirm those comments, the company added: "Our coffee stakes, in both KDP and JDE Peet's, have always been qualified as financial investments and we have been clear that they provide us flexibility as we seek opportunities to grow our core snacks business. We continue to believe both KDP and JDE Peet's have tremendous potential and we are confident in both the strategic direction and management of the two companies. There is still value upside for us."

A danger, of course, is over-paying. Mondelez won't be alone in wanting to gobble up better-for-you snacks as consumers look more often to treat themselves in healthier ways. Look at the way Mars, in the final weeks of 2020, bought up the remainder of US snack-bar business Kind.

There is every chance healthy snacks is set to be an active part of the packaged-food industry when it comes to M&A in 2021.