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November 12, 2013

US: Annie’s eyes snacks expansion through factory deal

US natural and organic food firm Annie's could look to boost its snacks production after buying a plant owned by retail giant Safeway Inc.

By Dean Best

US natural and organic food firm Annie’s could look to boost its snacks production after buying a plant owned by retail giant Safeway Inc.

Annie’s has acquired a factory in Joplin in Missouri that already produces cookies and crackers for the business. It has paid $6m for the plant, plus the cost of inventory and supplies.

“This acquisition is an attractive business opportunity that will help us go after the significant, untapped, growth and profit potential in our snack business,” Annie’s co-founder and CEO John Foraker said. “The Joplin plant provides capacity to more than triple our current cookie and cracker production volume and will allow us to grow faster and more profitably than we otherwise could.”

Foraker revealed the deal when Annie’s announced its first-half results on Thursday (7 November).

In the six months to the end of September, earnings climbed 28% to US$7.58m from $5.9m a year earlier. Operating profit was up 28.5% to $13.5m.

Net sales were up 20.6% to $58.7m, driven by “significant” increases in conventional sales channels.

Foraker said: “As you know, snacks have been an important contributor to our recent sales growth. However, we believe we’ve only scratched the surface of our real potential in this part of our business. To provide some context, in the grocery channel, the category leader in mac and cheese is about ten times our size, while the category leader in crackers is over 40 times our size. We know that consumers love our Cheddar Bunny and Bunny Grahams snack offerings. We see significant opportunities to broaden our product offerings and to expand and improve our mainline distribution, much like we are successfully doing in the mac and cheese category.”

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