US food group B&G Foods plans to accelerate the growth rate of its snack business through its acquisition of Pirate Brands.

B&G Foods announced this morning (10 June) it has snapped up the Pirate Brands business, including the Pirate’s Booty brand, for US$195m. The deal is the third B&G has made in the snacks sector since September, when it entered the industry with the acquisition of a clutch of brands from Chipita America.

Speaking to analysts on a conference call today, B&G CEO David Wenner conceded the acquisition price was a “relatively high multiple by B&G Foods standards”.

However, he insisted the business was worth the purchase price. “The typical business we purchase has a history of declining sales; this business has been experiencing double-digit growth for several years. We typically have to refresh the brand image and packaging. Here we have a brand that fits today’s trends of healthy snacking and the packaging does an excellent job.”

Significantly, Wenner emphasised Pirate Brands’ “growth prospects are worth a higher multiple”, as B&G has identified a number of opportunities that will enable it to step up growth. B&G will focus on the Pirate’s Booty brand, which accounts for 90% of sales.

In recent years, Pirate Brands has achieved double-digit sales growth by extending Pirate’s Booty into club and other distribution channels and introducing pack sizes that are appropriate for these formats, Wenner said. However, the brand remains under represented in mass channels and B&G believes it is on-trend for shoppers at the likes of Wal-Mart Stores and Target Corp.

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“Mass is one of the most under-developed portions of the business: it was under 10% of 2012 net sales and is an area where we see significant opportunities,” Wenner said. “There is no reason why we can’t beef up in mass.”

In addition, Wenner suggested the company will be able to grow the brand by introducing different flavours. “There are also potential growth opportunities from extended flavour offerings from the various sizes as the large majority of sales are done in one flavour.”

“We are buying this as something we believe we can grow well above our average,” Wenner insisted.

While B&G expects to drive growth of the Pirate Brands business, the company also expects that by expanding its snack portfolio it will be able to present a more compelling offer to retailers – with a knock-on benefit to its existing snack brands. B&G’s snacks portfolio includes the New York Style, Old London, JJ Flats and Devonsheer brands it acquired from Chipita in October – plus the TrueNorth nut brand it snapped up from DeMet’s Candy Co. in May.

“The acquisition of Pirate Brands significantly strengthens our ability to implement our strategy of expanding into snacks and lends critical mass – as well as a great business – to that effort,” Wenner said.

With 25% of Pirate Brands’ sales coming from warehouse and club stores, the deal “add mass to our current attempts to penetrate those channels”, he added.

Likewise, in the supermarket channel – where 60% of Pirate Brands’ revenues are generated – products are primarily found in grocery / healthy snack aisle – “this positioning should help and add to our efforts in this aisle”, the B&G boss noted.