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January 22, 2021

US Hispanic-cuisine firm Tropicale Foods buys peer Paleteria La Michoacana

Investor-backed Tropicale Foods, a manufacturer of frozen Hispanic products, has expanded in the US through M&A.

By Dean Best

Investor-backed Tropicale Foods, a US manufacturer of frozen Hispanic products, has acquired Paleteria La Michoacana, a peer company based in California.

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The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
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Tropicale Foods and its Illinois-based private-equity backers Wind Point Partners, said Paleteria La Michoacana (PLM) is being acquired from fellow investors Canum Capital Partners in San Francisco and Greyrock Capital Group, a buy-out firm in California.

PLM also produces frozen Hispanic products such as paletas (ice pops), bolis (snacks), and mangonada cups (smoothies) sold throughout the US in retailers, convenience stores, and traditional grocers under the brand La Michoacana. The company has one production site, a 45,000 square-foot facility in Modesto, California.

Steven Schiller, the CEO of Tropicale, said: “The cultures of our two companies are very similar, making this a natural partnership. PLM has built a terrific business with a great brand, customer base, team, and operation. Our plan is to invest behind PLM and the La Michoacana brand and leverage our combined capabilities to accelerate growth for our customers.”

Financial terms were not disclosed. The founders of Canum Capital will remain invested in the combined company.

Located in Ontario, Tropicale also makes paletas under its Helados Mexico brand, along with bolis and mangonada supplied to retailers.

Wind Point invested in the business in 2019 in partnership with snacks industry veteran José Luis Prado, who was once the CEO of Evans Food Group, a manufacturer of branded and private-label pork rind snacks.

"Tropicale will continue to seek strategic acquisition opportunities, with a focus on leading branded frozen novelty businesses," Wind Point said.

The private-equity investor has also previously invested in Stir Foods, a contract manufacturer in California, and Wisconsin-based Gehl Foods, a producer of dairy-based beverages and cheese sauces.

Brandon Gregorio and Robert Spigner, co-founders of Canum Capital, added: "We're proud of the industry-leading growth and operational transformation executed by PLM over the last four years. This combination of strong, recognised brands unites two customer-driven companies with highly complementary capabilities. The financial backing of Wind Point Partners and our continued investment in the combined company will enable a value creation plan that will accelerate growth."

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Free Report
img

What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

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