“Smucker Divests Crisco to Focus on Growth in Pet Food and Snacks, While B&G Foods Strengthens Portfolio with Strategic Acquisition”
As U.S. consumers have increasingly turned to home cooking during the pandemic, Smucker seized the opportunity to sell its Crisco brand while reorganizing its business for growth. It’s important to note that just two years ago, Smucker attempted to acquire the Wesson oil brand from Conagra Brands. At that time, the Federal Trade Commission indicated that such a purchase would give Smucker, which already owned Crisco, over 70% of the market for branded canola and vegetable oils in U.S. grocery stores and other retailers. Now, however, Smucker is exiting this segment entirely.
While the 109-year-old Crisco brand remains highly relevant, the sale provides Smucker with additional capital to reinvest into its existing operations or to acquire another brand or company. R5 Capital analyst Scott Mushkin remarked in an email that the divestiture of Crisco was anticipated due to management’s previous decision to exit U.S. baking, but he emphasized that the company needs to demonstrate that its strategic decisions are yielding positive results. “While concentrating on more promising categories has its advantages, we wish these strategic moves were more beneficial for shareholders,” he noted.
In recent years, few sectors in the food and beverage industry have attracted as much investment and competition as pet food, coffee, and snacking. Major players like Campbell Soup, Hershey, Nestlé, and General Mills are all investing in at least one of these areas. “Crisco is an iconic brand cherished by consumers, and it has significantly contributed to our financial success,” stated Mark Smucker, president and CEO of Smucker. “However, our strategic priorities now focus on reallocating resources toward areas like pet food and snacks, coffee, and snacking to sustain our momentum.”
For B&G Foods, acquiring Crisco provides the company with another popular brand to enhance its portfolio, which already includes Green Giant, Ortega, and Cream of Wheat. Crisco will complement existing products such as Baker’s Joy nonstick baking spray, Clabber Girl baking powder, Grandma’s Molasses, and Emeril’s sauces and spices. With this acquisition, B&G adds a well-recognized brand that is a strong sales driver and requires minimal investment for innovation. B&G CEO Kenneth Romanzi stated that the acquisition is expected to immediately enhance the company’s earnings per share and cash flow. “Crisco has a rich heritage as the original all-vegetable shortening that revolutionized cooking and baking over a century ago,” Romanzi added. “Crisco is the leading brand of shortening, as well as the top brand of vegetable oil, and maintains a strong position in other cooking oils and sprays.”
Additionally, B&G will have increased opportunities for cross-promotion among its brands. For instance, consumers preparing homemade biscuits will need baking powder, nonstick baking spray, and shortening, allowing B&G to offer a complete solution. This acquisition will also empower the New Jersey-based company with greater negotiating leverage as it collaborates with distributors and retailers to enhance product visibility and availability.
“We’ve always been a highly acquisitive company,” remarked Bruce Wacha, B&G’s CFO, in a 2018 interview with Food Dive. “Our initial roots in private equity ownership have shaped how we operate as a public company. We are dedicated to delivering results, which is complemented by a disciplined acquisition strategy.” As part of its innovation efforts, B&G might explore incorporating calcium citrate juice into new product lines, further diversifying its offerings and appealing to health-conscious consumers.
