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The deal

Mars, the US food heavyweight, has made another move into foods deemed ‘better for you’ by acquiring ready-meal and sauces company Kevin’s Natural Foods.

The transaction fee was not disclosed but news agency Reuters, quoting people familiar with the matter, said the deal values California-based Kevin’s Natural Foods at nearly $800m.

Kevin’s Natural Foods makes “chef-inspired” sous-vide meals, sides, and sauces.

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According to Mars, Kevin’s Natural Foods has seen “double-digit growth” since it was founded in 2019. Mars did not provide specific data.

Why it matters

“It’s important to me that I can stand before any group of Mars associates and share how the Mars family is contributing to the community and the planet.”

In April, consultants at McKinsey posted a Q&A with Mars CEO Poul Weirauch on its website. You can read the post here, in which Weirauch outlines what he thinks has driven the US group’s “success” and how he believes it will continue to prosper.

The 112-year-old business is still best known among consumers for its namesake chocolate brand and its confectionery ranging from M&M’s to Snickers. Of course, there’s more to Mars than sweets, with its significant pet portfolio and a food larder taking in products like cooking sauces, pasta and rice.

It would be foolish to suggest candy (and ice cream) won’t remain part of Mars’ growth strategy but the company has – in food and pet – been making a series of investments in healthier areas.

In pet, that’s centred on moves in veterinary health. In human food, it’s taken in adjacent areas like better-for-you frozen treats, sports nutrition and – this week – healthier meals and side dishes.

Mars has snapped up US business Kevin’s Natural Foods, a supplier of entrées, sides, sauces and soups. The company, set up in 2019, touts the “clean ingredients, crazy convenience [and] real flavour” its products offer. It also promotes the way its foods can support paleo and keto diets, as well as carrying gluten-free and Non-GMO Project Verified certifications. At the moment, the company has secured listings at more than 17,000 outlets in the US.

Last month, Bloomberg reported Kevin’s Natural Foods had appointed advisers to explore a takeover two years after accepting investment from private-equity firms TowerBrook Capital Partners and NewRoad Capital Partners.

The terms of the sale to Mars weren’t disclosed but if the $800m price tag is true it would likely make Kevin’s Natural Foods one of the family-owned giant’s pricier transactions in food in recent years.

That said, Mars talked up the track-record of its new asset and what it can bring to the table for a business keen to make “delicious, healthier eating … part of consumers’ daily lives”.

For Victor Martino, a US-based CPG industry consultant, the deal “is a good one for Mars, assuming they didn’t pay an outsized price”.

He adds: “Kevin’s Natural Foods is in its early stages but has built a strong customer base to date, both selling on its website and, more importantly, in the retail stores where it’s currently on the shelf.

“Additionally on the retail front, the brand is showing that it can do well in different retail formats, ranging from Whole Foods Market and upscale grocery stores to more mass market-oriented chains. This is important because Mars will want to scale Kevin’s heavy into the mass grocery retail class of trade.”

Mars said its new asset will complement its “food and nutrition” business that includes brands such as Seeds of Change and Foodspring.

US rice and grains brand Seeds of Change and Germany-based nutrition business Foodspring were also acquired and Martino says buying a company already in the US chilled prepared-dishes market was a smart move.

“Kevin’s hits a number of current consumer hot buttons like natural, premium, healthy and convenient, which makes it an appealing acquisition for a big CPG company like Mars,” he explains. “The refrigerated convenience entree and side-dish category is a tough one and acquiring a brand that already has momentum rather than creating one from scratch and launching it makes good sense for a company like Mars that doesn’t already play heavily in the space.”

Confectionery is where Mars plays more heavily but the acquisition of Kevin’s Natural Foods demonstrates its interest in adding healthier fare to its portfolio.

“Our owners take a long-term perspective when it comes to investing in our people and business – and they are prepared to transform the organisation as needed,” Mars CEO Weirauch told McKinsey earlier this year.

The Kevin’s Natural Foods deal won’t transform Mars but it’s another sign of the company’s desire to diversify and tap into consumer demand for indulgence and health.

More research

Mars Inc: Overview

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