Homegrown Rollup Creates $50 Million Foods Player
Published: Sunday, October 01, 2000
Homegrown Natural Foods Inc., based here, a majority stakeholder in Wakefield, MA-based Annie’s Homegrown Inc., entered into an agreement, announced Sept. 21, to acquire both Napa Valley Kitchens Inc. and Fantastic Foods Inc., creating a $50 million, multibrand, high-growth player in the highly fragmented natural foods space. It’s the first major intraindustry foods company merger in a number of months. Recent acquirers of natural foods businesses have been large, multinational foods companies looking to enter or expand their presence in the category.
Homegrown, founded in 1999 by John Foraker and E. Michael Moone in part to fund its Annie’s placement of December 1999, will centralize Napa Valley and Fantastic Foods sales and marketing efforts in its Napa, CA, offices. Both Napa Valley Kitchens and Annie’s use co-packers, while Fantastic Foods manufactures from a facility in Petaluma, CA.
Annie’s and Napa Valley Kitchens earlier this year entered into a sales and marketing agreement whereby Napa Valley provides overall marketing management services and sales representation in the distributor and club-store channels. Annie’s will remain an independent subsidiary with what Foraker calls “obvious strategic and sales and marketing ties” to Homegrown.
Napa Valley Kitchens sells the Consorzio brand of flavored olive oils, marinades and salad dressings. Annie’s is a leading brand of packaged macaroni-and-cheese products. Fantastic Foods is a long-standing manufacturer of instant soup and meal cups, which was not part of the December 1999 deal that saw
General Mills take over the Cascadian Farm and Muir Glen lines of organic packaged foods in its purchase of Small Planet Foods.
Terms of the agreements were not disclosed. The deal was expected to close in early October. Tucker Anthony Cleary Gull advised Homegrown, and U.S. Bancorp Piper Jaffrey advised Fantastic Foods, in the transaction.
According to Homegrown Chairman and CEO Foraker, who served as CEO of Napa Valley Kitchens,
the acquisitions will
provide a number of synergies,
especially in expanded distribution for each of the brands.
“This union will allow us to increase the distribution of all of the Homegrown products to the club and discount channels and will increase our presence in more geographic areas of the country,” he says. “For example, Annie’s is very strong on the East Coast, and we’ll use those relationships to get increased distribution for Consorzio olive oils, especially in the New York metro area.
“Our goal is to build these acquired brands and make them available to more consumers while remaining true to the product quality and brand heritage created by each company’s founders,” he adds. Foraker says increased distribution to the food service and ingredients areas provides great opportunities for the brands.
Fantastic Foods founder Jim Rosen and Annie Withey, co-founder of Annie’s, will each hold seats on Homegrown’s advisory board.
Foraker adds that the company will aggressively pursue other acquisitions that have crossover appeal and complement Homegrown’s current holdings.
Fantastic Foods, which was owned by Trefoil Capital Investors— which sold Small Planet to General Mills—continues to be an investor in Homegrown, as does the Rosewood Venture Group of San Francisco. Trefoil is managed by Shamrock Holdings, the investment company of the Roy Disney family. While it’s no secret that Fantastic Foods had been underperforming for the last four years, Foraker says the company has enjoyed a turnaround, with increases in sales in 2000 spurred by a new line of large-format noodle-soup cups and a continued move to organic ingredients. Share lead in the cup category increased significantly over the last six months, he says.